ACIT 16(1), MUMBAI V. JAMSHED R VAKHARIA, MUMBAI

ITA 5074/MUM/2012

• Counselvise Citation: 507419914 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 31-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 08-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TUSHARBHAWAL SINGH
• Keywords: Capital asset; Gift; Cost of acquisition; Fair market value

Judgement Text

J IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI .. , !'# $ $ $ $ %&. !.'.. $( ) !'# !* BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM !./ I.T.A. NO. 5074 /MUM/2012 ( )( , $-, )( , $-, )( , $-, )( , $-, / / / / ASSESSMENT YEAR : 2007-08 ASSTT. COMMISSIONER OF INCOME TAX 16(1), 2 ND FLOOR, MATRU MANDIR, TARDEO ROAD,, MUMBAI 400 007. ( ( ( ( / VS. MR. JAMSHED R. VAKHARIA, 4B, VELLARD VIEW, PEDDAR ROAD, MUMBAI 400 026. #. !./ PAN : AAIPV6336L ( ./ / // / APPELLANT ) .. ( 01./ / RESPONDENT ) APPELLANT BY SHRI TUSHARBHAWAL SINGH RESPONDENT BY : NONE !($ 2 / // / DATE OF HEARING : 03-10-2013 34- 2 / DATE OF PRONOUNCEMENT : 13-11-2013 [ '5 / O R D E R PER P.M. JAGTAP, A.M . : .. , !'# THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) 1, MUMBAI DATED 29-05-2012 AND IN THE SOLI TARY GROUND RAISED THEREIN, THE REVENUE HAS CHALLENGED THE ACTION OF T HE LD. CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION FROM THE CO MPUTATION OF CAPITAL GAIN ON ACCOUNT OF THE INDEXED COST OF ACQUISITION BASED ON THE FAIR MARKET VALUE AS ON 1-4-1981. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDU AL WHO IS ENGAGED IN THE BUSINESS OF SHARE TRADING. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM ON 31-10-2007 DECLAR ING TOTAL INCOME OF RS. ITA 5074/M/12 2 36,90,570/- ON ACCOUNT OF LONG TERM CAPITAL GAIN. T HE SAID CAPITAL GAIN HAD ARISEN FROM THE SALE OF RESIDENTIAL FLAT BY M.A. SU BASH TRUST ON BEHALF OF THE ASSESSEE. THE ASSESSEE WAS A BENEFICIARY OF THE SAI D TRUST AND THE PROPERTY WAS INHERITED BY HIM IN THE FINANCIAL YEAR 2001-02. IN THE COMPUTATION OF CAPITAL GAIN, THE ASSESSEE HAD CLAIMED THE INDEXED COST OF ACQUISITION BY TAKING THE INDEXATION FROM THE YEAR OF ACQUISITION BY PREVIOUS OWNER. ACCORDING TO THE A.O., ALTHOUGH THE PERIOD OF HOLDI NG BY THE PREVIOUS OWNER WAS REQUIRED TO BE ADDED IN THE PERIOD OF HOLDING O F THE ASSESSEE TO ASCERTAIN AS TO WHETHER THE ASSET IS SHORT TERM OR LONG TERM CAPITAL ASSET, THE SAME COULD NOT BE CONSIDERED FOR THE PURPOSE OF INDEXATI ON. HE, THEREFORE, REJECTED THE CLAIM OF THE ASSESSEE ON THIS COUNT AND ALLOWED THE DEDUCTION ON ACCOUNT OF INDEXED COST OF ACQUISITION FROM FINANCIAL YEAR 2001-02 ONLY BEING THE YEAR IN WHICH THE PROPERTY WAS ACQUIRED BY THE ASSESSEE BY INHERITTANCE. THE LONG TERM CAPITAL GAIN CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE THUS WAS WORKED OUT BY THE A.O. AT RS. 50,35,877/- AS AGAINS T RS. 36,90,576/- DECLARED BY THE ASSESSEE. 3. AGAINST THE ORDER PASSED BY THE A.O., THE ASSESS EE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO ALLOWED THE BENEFIT OF IN DEXATION AS CLAIMED BY THE ASSESSEE RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MANJULA M. SHAH REPORTED IN (2011) 16 TAXMAN.COM 42 (BOM.) WHEREIN IT WAS HELD THAT WHILE COMPUTING THE CAPITAL GAINS ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIRED BY THE ASSESSEE UNDER A GIFT OR WILL , INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WH ICH THE PREVIOUS OWNER FIRST HELD ASSET AND NOT FROM THE YEAR IN WHICH ASS ESSEE BECAME OWNER OF ASSET. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), T HE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, NONE HAS APPEARED ON BEH ALF OF THE ASSESSEE. HOWEVER, KEEPING IN VIEW THAT THE ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY TH E DECISION OF HONBLE ITA 5074/M/12 3 JURISDICTIONAL HIGH COURT IN THE CASE OF MANJULA M. SHAH (SUPRA) AS AGREED EVEN BY THE LD. D.R., THIS APPEAL OF THE REVENUE IS BEING DISPOSED OF ON MERIT EX PARTE QUA THE RESPONDENT-ASSESSEE. AS RIGHTLY HE LD BY THE LD. CIT(A), THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F MANJULA M. SHAH IS SQUARELY APPLICABLE TO THE ISSUE INVOLVED IN THIS A PPEAL AND RESPECTFULLY FOLLOWING THE SAID DECISION, WHICH IS IN FAVOUR OF THE ASSESSEE, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ALLOWING THE DEDUC TION CLAIMED BY THE ASSESSEE ON ACCOUNT OF INDEXED COST OF ACQUISITION AS COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET. THIS APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH NOVEMBER, 2013. . '5 2 34- 6'(7 13-11-2013 4 2 SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) ) !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; 6'( DATED 13-11-2013 $.)(.!./ RK , SR. PS '5 2 0)89 :9- '5 2 0)89 :9- '5 2 0)89 :9- '5 2 0)89 :9-/ COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. ; () / THE CIT(A)1, MUMBAI. 4. ; / CIT 16, MUMBAI 5. 9$> 0))( , , / DR, ITAT, MUMBAI J BENCH 6. %, ? / GUARD FILE. '5(! '5(! '5(! '5(! / BY ORDER, !19 0) //TRUE COPY// @ @ @ @/ // /!A !A !A !A ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI