ITO (IT) 3(1), MUMBAI V. DAVID NIEGEL HARDY, MUMBAI

ITA 5331/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92768 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 04-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA , ACCOUNTANT MEMBER ITA NO. 5331/MUM/2012 (ASSESSMENT YEAR: 2009 - 10 ) INCOME TAX OFFICER (IT) - 3(1) VS. SHRI DAVID NIEGEL HARDY 114, SCINDIA HOUSE BALLARD PIER, MUMBAI 400038 C/O. DR. JEHANGIR KOHIAR FLAT NO.6 , SEA LAND 41 CUFF PARADE , COLABA MUMBAI 400005 PAN - ACKPH5363F APPELLANT RESPONDENT APPELLANT BY: SHRI LOVE KUMAR RESPONDENT BY: MS. NEHA PARANJPE DATE OF HEARING: 16.06. 2015 DATE OF PRONOUNCEMENT: 16.06.2015 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY CIT(A) - 10, MUMBAI AND IT PERTAINS TO A.Y. 2009 - 10. 2. FOLLOWING GROUNDS WERE URGED BEFORE US: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE BASE YEAR FOR DETERMINING THE INDEXED COST OF ACQUISITION SHOULD BE F.Y. 1971 - 82 AS AGAINST F.Y. 2007 - 08 DETERMINED BY THE ASSESSING OFFICER WITHOUT APPRECI ATING THE FACT THAT CLAUSE (III) OF EXPLANATION TO THE PROVISO TO SECTION 48 OF THE I.T. ACT, 1961 SPECIFICALLY ALLOWS INDEXATION FORM THE DATE OF HOLDING OF THE ASSET BY THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . CIT(A) HAS ERRED IN HOLDING THAT THE BASE YEAR FOR DETERMINING THE INDEXED COST OF ACQUISITION SHOULD BE F.Y. 1981 - 82 AS AGAINST F.Y. 2007 - 08 DETERMINED BY THE ASSESSING OFFICER WITHOUT APPRECIATING THE FACT THAT THE RIGHT TO HOLD THE PROPERTY DIVESTED O N THE ASSESSEE ONLY AFTER THE DEMISE OF HIS MOTHER IN F.Y. 2007.08 AND THUS, F.Y. 2007 - 08 WAS THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE. ITA NO. 5331/MUM/2012 SHRI DAVID NIEGEL HARDY 2 3. ASSESSEE IS A NON - RESIDENT AND IS RESIDING IN THE US. DURING THE YEAR UNDER CONSIDERATION HE HAS EARNE D LONG TERM CAPITAL GAINS ON SALE OF PROPERTY IN INDIA AND ALSO EARNED INCOME FROM OTHER SOURCES BEING INTEREST FROM BANK. WITH REGARD TO THE SALE OF FLAT AT CUFFE PARADE, MUMBAI, THE SALE PRICE OF ` 13,44,00,000/ - IS NOT IN DISPUTE AND ASSESSEES SHARE IS 50%. THE ORIGINAL OWNER OF THE FLAT EXPIRED IN MUMBAI ON 06.06.2007 LEAVING A WILL, WHEREBY HER TWO SONS INHERITED THE PROPERTY IN EQUAL SHARES. THUS THE ASSESSEE HAD 50% OWNERSHIP IN THE SAID FLAT. THE PROPERTY BEING SOLD ON 17.04.2008 ASSESSEE DECLARED L ONG TERM CAPITAL GAINS IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND FOR THE PURPOSE OF WORKING OUT THE LONG TERM CAPITAL GAINS HE HAS TAKEN THE INDEXATION FROM 01.04.1981 AT ` 27,02,000/ - . IT IS NOT IN DISPUTE THAT ASSESSEES MOTHER WAS HOLDING THE PROPE RTY PRIOR TO 1981. THEREFORE, FOR THE PURPOSE OF INDEXATION ASSESSEE HAD TAKEN INTO CONSIDERATION THE COST AS ON 01.04.1981. IN THE OPINION OF THE AO, ASSESSEES MOTHER HAVING EXPIRED ON 06.06.2007 THE VALUE AS ON 06.06.2007 HAS TO BE TAKEN INTO CONSIDERAT ION AND ACCORDINGLY ASSESSMENT WAS MADE UNDER SECTION 143(3) OF THE ACT. 4. ON AN APPEAL FILED BY THE ASSESSEE THE LEARNED CIT(A) OBSERVED THAT THE ISSUE IS NO LONGER RES INTEGRA, IN THE LIGHT OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF MANJULA J. SHAH [ ( 2011 ) 16 TAXMANN.COM 42] AND HELD THAT THE ASSESSEE IS DEEMED TO HAVE HELD THE PROPERTY FROM THE TIME THE EARLIER OWNER ACQUIRED THE PROPERTY; IN THE INSTANT CASE THE ORIGINAL OWNER WAS HOLDING THE PROPERTY PRIOR TO 01.04.1981 AND HENCE THE VALUE AS ON 01.04.1981 HAS TO BE TAKEN INTO CONSIDERATION. 5. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY RELIED UPON THE ORDER PASSED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANJULA J. SHAH 355 ITR 474 AND SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. 6. THE LEARNED D.R., ON THE OTHER HAND, SUBMITTED THAT THE REVENUE HAS NOT ACCEPTED THE VIEW TAKEN BY THE HON'BLE BOMBAY HIGH COURT BUT COULD NOT PLACE ANY ORDER O F A SUPERIOR FORUM WHEREIN A CONTRARY VIEW IS TAKEN. ITA NO. 5331/MUM/2012 SHRI DAVID NIEGEL HARDY 3 7. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2015. SD/ - SD/ - ( SANJAY ARORA ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 16 TH JUNE, 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 10 , MUMBAI 4. THE DIT (IT) - II , MUMBAI 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.