ITO 19(3)(5), MUMBAI V. YOGENDRA C. JHAVERI, MUMBAI

ITA 524/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9704 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 03-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.524/MUM/2016 (ASSESSMENT YEAR 2011-12) THE INCOME TAX OFFICER 19(3)(5), MATRU MANDIR, TARDEO ROAD, MUMBAI 400 007 ...... APPEL LANT VS. SHRI YOGENDRA C JHAVERI, NO.97, JAIN TEMPLE COMPOUND, NEXT TO WHITE HOUSE, 70, WALKESHWAR ROAD,MUMBAI 400 006 PAN: AABPJ 4414C ..... RESPONDENT APPELLANT BY : SHRI V.JUSTIN RESPONDENT BY : NONE DATE OF HEARING : 03/07/2017 DATE OF PRONOUNCEMENT : 31/07/2017 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEAL FILED BY THE REVENUE PERTAIN ING TO THE ASSESSMENT YEAR 2011-12 IS DIRECTED AGAINST ORD ER PASSED BY THE CIT(A)- 30, MUMBAI DATED 12/11/2015, WHICH IN TURN, ARISES OUT OF ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 25/03/2014. 2. AT THE TIME OF HEARING, IT WAS NOTED THAT NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF NOTICE OF HEARING BEING S ERVED UPON THE ASSESSEE. THEREFORE, I PROCEED TO DISPOSE-OFF THE APPEALS EX- PARTE QUA THE RESPONDENT 2 ITA NO.524/MUM/2016 (ASSESSMENT YEAR 2011-12) ASSESSEE AFTER HEARING THE LD. DEPARTMENTAL REPRES ENTATIVE ON MERITS IN TERMS OF RULE -25 OF INCOME TAX (APPELLATE TRIBUNAL ) RULES, 1963. 3. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) WAS RIGHT IN ALLOWING THE ASSESSEES CLAI M OF ALLOWING COST INFLATION INDEX OF THE YEAR IN WHICH THE PROPERTY WAS HELD BY HIS F ATHER AND NOT OF THE YEAR IN WHICH THE ASSESSEE ACTUALLY BECAME THE OWNER? 4. BRIEFLY PUT, THE CONTROVERSY IN THIS APPEAL RELA TES TO THE MANNER OF COMPUTATION OF LONG TERM CAPITAL GAIN ON SALE OF PR OPERTY SITUATED AT 97,WALKESHWAR ROAD, MUMBAI BY THE ASSESSEE. THE SH ORT POINT INVOLVED IS WITH REGARD TO THE CALCULATION OF INDEXED COST OF A CQUISITION OF THE PROPERTY FOR THE PURPOSES OF LONG TERM CAPITAL GAIN. SHORN OF OTHER DETAILS, FOR THE PURPOSES OF APPRECIATING THE CONTROVERSY BEFORE US, THE FOLLOWING FACTS ARE RELEVANT. THE PROPERTY IN QUESTION WAS PURCHASED BY ASSESSEES FATHER LATE CHANDRAKANT JHAVERI PRIOR TO 1981. THE SAID LATE C HANDRAKANT JHAVERI EXPIRED ON 12/03/2005, AFTER WHICH ASSESSEE AND OTH ER LEGAL HEIRS ACQUIRED THE PROPERTY BY SUCCESSION/INHERITANCE AND THE SAME HAS BEEN SOLD IN THIS YEAR. WHILE CALCULATING THE LONG TERM CAPITAL GAIN ON SALE OF THE PROPERTY, ASSESSEE ADOPTED THE COST INFLATION INDEX FOR THE Y EAR 1981-82, WHEREAS THE ASSESSING OFFICER WAS OF THE OPINION THAT THE INDEX ED COST OF ACQUISITION HAS TO BE COMPUTED TAKING THE YEAR OF ACQUISITION A S 2004-05 I.E. THE YEAR WHEN ASSESSEE INHERITED THE PROPERTY. THE CLAIM OF THE ASSESSEE WAS THAT IN TERMS OF CLAUSE (III) OF EXPLANATION TO SECTION 48 OF THE ACT, THE INDEXED COST OF ACQUISITION OF THE CAPITAL ASSET HAS TO BE COMPU TED WITH REFERENCE TO THE YEAR IN WHICH PREVIOUS OWNER FIRST HELD THE ASSET, WHEREAS THE CONTENTION OF 3 ITA NO.524/MUM/2016 (ASSESSMENT YEAR 2011-12) THE ASSESSING OFFICER WAS THAT BECAUSE OF THE PRESE NCE OF EXPRESSION THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSE SSEE USED IN THE SAID CLAUSE OF EXPLANATION TO SECTION 48, THE INDEXED COST OF ACQUISITION IS TO BE COMPUTED WITH REFERENCE TO THE YEAR WHEN ASSESSEE H IMSELF BECOME THE OWNER OF THE CAPITAL ASSET AND, THEREFORE, ACCORDIN G TO THE REVENUE THE SAID YEAR IN THE INSTANT CASE IS FINANCIAL YEAR 2004-05 AND NOT FINANCIAL YEAR 1981- 82. 5. THE CIT(A) HAS DISAGREED WITH THE ASSESSING OFFI CER ON ACCOUNT OF THE JUDGMENTS OF THE HON'BLE BOMBAY HIGH COURT IN THE C ASE OF CIT VS. MANJULA J. SHAH, 355 ITR 474 (BOM) AS WELL AS THE JUDGMENT IN THE CASE OF CIT VS. NITA KAMLESH TANNA, 220 TAXMANN 165(BOM). AGAINST SUCH A DECISION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 6. AT THE TIME OF HEARING, NO COGENT REASONING OR M ATERIAL HAS BEEN LEAD BY THE REVENUE TO DEMONSTRATE AS TO HOW THE CIT(A) IS WRONG IN DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE FOLLOWING THE JUDG MENTS OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF MANJULA J. SHAH (S UPRA) AND IN THE CASE OF NITA KAMLESH TANNA(SUPRA). AS A CONSEQUENCE, WE HE REBY AFFIRM THE DECISION OF THE CIT(A) ON THIS ASPECT AND REVENUE FAILS IN ITS APPEAL. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/07/2017 SD/- SD/- (RAVISH SOOD) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 31/07/2017 VM , SR. PS 4 ITA NO.524/MUM/2016 (ASSESSMENT YEAR 2011-12) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI