ITO (IT)-3(1), MUMBAI V. MARIA FLEURETTE FERNANDEZ, MUMBAI

ITA 4943/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62407 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 22-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Keywords: Capital asset; Gift; Cost of acquisition
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI N.K. BILLAIYA (A.M.) ITA NO. 4943/MUM/2011 ASSESSMENT YEAR : 2008-09 INCOME TAX OFFICER (INTERNATIONAL TAXATION)-3(1), ROOM NO.114, SCINDIA HOUSE, BALLARD PIER, MUMBAI. 400 038. VS. MRS. MARIA FLEURETTE FERNANDEZ, C/O ALLIED ELECTRONIC CORPORATION, 12-D, VIKAS CENTRE, S.V. ROAD, SANTACRUZ (W), MUMBAI- 400 054. PAN : AANPF8688A (APPELLANT) (RESPONDENT) REVENUE BY : SHRI P.C. MAURYA ASSESSEE BY : NONE DATE OF HEARING 02-5-2012 DATE OF PRONOUNCEMENT 16-5-2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DATED 10.03.2011 PASSED BY THE LD. CIT (A) - 10, MU MBAI FOR THE A.Y. 2008-09. 2. AT THE TIME OF HEARING, NONE ATTENDED ON BEHALF OF THE ASSESSEE NOR FILED ANY APPLICATION FOR THE ADJOURNMENT OF THE CA SE, THEREFORE, IT WAS DECIDED TO DISPOSE OF THE APPEAL EX PARTE QUA THE A SSESSEE, ON MERITS, AFTER HEARING THE LD. D.R. ITA NO. 4943/MUM/2011 MRS. MARIA F LEURETTE FERNANDEZ 2 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS AN NRI AND AN AUSTRALIAN CITIZEN. HER ONLY SOURCE OF INCOME IN INDIA DURING THE YEAR UNDER CONSIDERATION STATED TO BE INCOME FROM OTHER SOURCES BEING INTEREST FROM BANK AND OTHER INVESTMENTS. THE RETU RN WAS FILED DECLARING THE TOTAL INCOME AT RS. 130/- WHICH WAS SUBSEQUENTL Y REVISED DECLARING THE SAME INCOME. AFTER PROCESSING OF THE RETURN U/ S 143(1) OF THE INCOME TAX ACT 1961 (THE ACT), THE A.O. SELECTED TH E CASE FOR SCRUTINY AND ACCORDINGLY ISSUED STATUTORY NOTICES U/S 143(2) AND 142(1) OF THE ACT. DURING THE COURSE OF ASSESSMENT, THE A.O. OBS ERVED THAT THE ASSESSEE ALONG WITH CO-OWNERS HAS SOLD HOUSE PROP ERTY AT PALL HILL, BANDRA (W) MUMBAL FOR A TOTAL CONSIDERATION OF RS. 2,10,00,000. THE ASSESSEES SHARES IN THE PROPERTY IS AT 50%. HENCE, HER SALE CONSIDERATION COMES TO RS.1,05,00,000. AFTER TAKING INDEXATION AS ON 1-4-1981, LONG TERM CAPITAL GAINS WAS WORKED OUT BY THE ASSESSEE A T RS. 41,96,285. THE ASSESSEE HAS INVESTED AN AMOUNT OF RS. 50,00,000 U/ S 54E, HENCE, TAXABLE `LONG TERM CAPITAL GAINS WAS SHOWN AS NIL. THE A.O. FURTHER NOTED THAT THE ASSESSEE HAS CLAIMED TO HAVE ACQUIRED THE PROPERTY ON 1-10- 2006 AFTER DEATH OF HER MOTHER, THEREFORE, THIS PRO PERTY WAS HELD BY THE ASSESSEE W.E.F. 1-10-2006 I.E. THE DATE ON WHICH TH E ASSESSEE HAS ACQUIRED THE PROPERTY AS INHERITANCE. SINCE THE ASS ESSEE BECAME THE OWNER OF PROPERTY ON 1-10-2006, THEREFORE, THE A.O. ACCORDING TO SECTION 48(III) HELD THAT THE INDEXATION IS TO BE ALLOWED T O THE ASSESSEE FROM THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSES SEE. THE A.O. REFERRED ITA NO. 4943/MUM/2011 MRS. MARIA F LEURETTE FERNANDEZ 3 THE MATTER TO THE DVO WHO VALUED THE VALUE OF THE P ROPERTY AT RS. 2,29,58,972/- AND ACCORDINGLY HE COMPUTED THE LONG TERM CAPITAL GAIN AS UNDER:- SALE CONSIDERATION RS. 2,10,00,000 MARKET VALUE AS PER STAMP AUTHORITIES RS. 2,72,97 ,500 ============== VALUE AS PER DEPARTMENTAL VALUER AS DISCUSSED RS. 2 ,29,58,972 ASSESSEES HALF SHARE RS. 1,14,79,486 VALUATION COST AS ON 01.04.1981 RS.22,88,100 ASSESSEES ONE-HALF SHARE(FY 2006-07) RS. 11,44,0 50 ============ INDEXED COST : 1144050X551 519 = RS.12,14,588 RS.12,14,588 RS.1,02,64,898 LESS AMOUNT INVESTED IN UNDER SEC.54EC RS 5 0,00,000 TAXABLE LTCG RS. 52,64,898 =============== 4. ON APPEAL, THE LD. CIT(A) FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN DCIT V. MANJULA J. SHAH [2 009] 35 SOT 105 (MUM) WHEREIN IT HAS BEEN HELD THAT INDEXED COST OF CAPITAL ASSET ACQUIRED UNDER GIFT HAS TO BE COMPUTED WITH REFEREN CE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET, HELD THAT THE COST OF ACQUISITION OF FLAT WOULD BE DEEMED TO BE THE COST OF FLAT TO THE PREVIOUS OWNER. SINCE THE PROPERTY WAS ACQUIRED BY WAY OF WI LL, HENCE INDEXATION SHOULD BE ALLOWED AS ON 1-4-81 AS THE PREVIOUS OWNE R WAS HELD THE ITA NO. 4943/MUM/2011 MRS. MARIA F LEURETTE FERNANDEZ 4 PROPERTY PRIOR TO 1-4-81 AND ACCORDINGLY DIRECTED T HE A.O. TO ADOPT THE LONG TERM CAPITAL GAINS AT RS. 55,41,866/- AS PER W ORKING GIVEN IN PARA 1.3.1. OF HIS ORDER INSTEAD OF RS. 1,02,64,898 COMP UTED BY THE A.O. 5. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US BY TAKING THE FOLLOWING EFFECTIVE GROUND:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ADOPT THE COST OF INDEXATION AS ON 01.04.1981 AS THE PREVIOUS OWNER H AS HELD THE PROPERTY PRIOR TO 01.04.1981 AND ADOPT THE LONG TERM CAPITAL GAIN AT RS. 55,41,866/- INSTEAD OF RS. 1,02,64,898/- COMPUTED B Y THE ASSESSING OFFICER. 6. AT THE TIME OF HEARING, THE LD. D.R. WHILE RELYING ON THE ORDER OF THE A.O. VERY FAIRLY SUBMITS THAT NOW THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF MANJULA J. SHAH, THEREFORE, THE ISSUE MAY B E DECIDED ACCORDINGLY. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. D.R. AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE FACTS ARE NOT IN DISPUTE IN ASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS INHERITED THE PROPERTY ON 1-10-2006 AFTER THE DEATH OF HER MOTHER WHO ACQUIRED THE PROPERTY FROM HER HUSBAND WHO HELD THE PROPERTY SINCE 1952. THE A.O. FOR THE PURPOSE OF COMPUTATION OF CA PITAL GAIN TREATED THE DATE OF ACQUISITION OF THE PROPERTY AS ON 1-10-2006 AS AGAINST 1-4-1981 CLAIMED BY THE ASSESSEE FOR THE PURPOSE OF INDEXATI ON. THE LD. CIT(A) FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN MANJULA J SHAH (SUPRA) HAS ACCEPTED THE CLAIM OF THE ASSESSEE AND DIRECTED THE ITA NO. 4943/MUM/2011 MRS. MARIA F LEURETTE FERNANDEZ 5 A.O. TO ADOPT THE COST OF ACQUISITION AS ON 1-4-198 1. RECENTLY, THE HONBLE JURISDICTIONAL HIGH COURT IN CIT V. MANJULA J. SHAH [2012] 204 TAXMAN 691 (2011) (BOM), WHILE UPHOLDING THE DECISI ON OF THE SPECIAL BENCH OF THE TRIBUNAL HELD THAT (PARA 21) THE C APITAL GAINS LIABILITY HAS TO BE COMPUTED BY CONSIDERING THAT THE ASSESSEE HELD THE SAID ASSET FROM THE DATE IT WAS HELD BY THE PREVIOUS OWNER AND THE SAME ANALOGY HAS ALSO TO BE APPLIED IN DETERMINING THE INDEXED C OST OF ACQUISITION. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT O N RECORD BY THE REVENUE, WE RESPECTFULLY FOLLOWING THE ABOVE DECISI ON OF THE HONBLE JURISDICTIONAL HIGH COURT DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ACCOUNT. THE GROUNDS TAKEN BY T HE REVENUE ARE, THEREFORE, REJECTED. 8. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 16-5-2012. SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 16 TH MAY, 2012. RK ITA NO. 4943/MUM/2011 MRS. MARIA F LEURETTE FERNANDEZ 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE DIT (INTERNATIONAL TAXATION)- 2, MUMBAI 4. COMMISSIONER OF INCOME TAX (A) 10, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH B, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI