ITO WD 22(2)-2, NAVI MUMBAI V. LATE PRANNATH RAMJIDAS KATYAL LEGAL HEIR MRS. NIRMALA P. KATYAL, MUMBAI

ITA 5506/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55516 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 07-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Capital asset; Gift; Cost of acquisition; Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A.NO.5506/MUM/2010 A.Y 2007-08 THE INCOME TAX OFFICER -22(2)-2, MUMBAI. VS. LATE PRANNATH RAMJIDAS KATYAL, LEGAL HEIR MRS. NIRMALA P. KATYAL, BUNGALOW NO.12, ATUR PARK, V.N.PURAV MARG, CHEMBUR, MUMBAI 400 071. PAN: AAPPK 5838 H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.T.JACOB. SR. DR RESPONDENT BY : SHRI HARI S. RAHEJA. DATE OF HEARING: 04-10-2011 DATE OF PRONOUNCEMENT: 14-10-2011 O R D E R PER T.R.SOOD, AM: IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GR OUND: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO TAKE THE BASE YEAR FOR INDEXATION AT 1981-82 INSTEAD OF 2003 -04 AS TAKEN BY THE ASSESSING OFFICER AND CALCULATE CAPITA L GAINS ACCORDINGLY WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE BECAME THE OWNER OF THE SAID PROPERTY BY VIRTUE OF WILL FROM THE YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSE E I.E. 2003-04. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DUR ING THE ASSESSMENT PROCEEDINGS AO NOTICED THAT ASSESSEE HAS SOLD PROPERTY KNOWN AS KRISHNA KUTIR, CENTRAL AVENUE ROAD, CHEMBU R, MUMBAI. IN THE COMPUTATION OF INCOME ASSESSEE HAD SUBSTITUTED FAIR MARKET VALUE ON SUCH VALUATION. THE AO ISSUED A SHOW CAUSE NOTIC E THAT SINCE ITA NO.5506 OF 2010 2 ASSESSEE HAVE BECOME OWNER OF THE PROPERTY ONLY ON 28-12-2003, WHY INDEXATION BENEFIT SHOULD NOT BE RESTRICTED ONLY FR OM A.Y 2003-04. IN RESPONSE, IT WAS STATED VIDE LETTER DATED 23-9-2011 AS UNDER: SHOW CAUSE AS TO WHY THE INDEXATION CLAIMED BY YOU FROM 1981-82 SHOULD NOT BE DISALLOWED AND WHY THE SAME SHOULD NO T BE GRANTED FROM 2003-04 FOR CALCULATING TAXABLE LONG TERM CAPI TAL GAIN FROM SALE OF KRISHNA KUTIR IN THIS RESPECT WE PLACE ON RECOR D THAT THE ASSESSEE ACQUIRED THE KRISHNA KUTIR FROM BALKRISHNA DAULATRA M KHOSLA THROUGH WILL IN THE FINANCIAL YEAR 2003-04 WHEREAS THE PREV IOUS OWNER LATE MR. BALKRISHNA D KHOSALA PURCHASED THE SAID PROPERT Y ON 8TH MAY 1958 (COPY OF PURCHASE DEED ENCLOSED) IN THIS RESPE CT WOULD LIKE TO RELY ON THE RECENT JUDGEMENT OF SPECIAL BENCH OF IT AT OF MUMBAI IN CASE OF DCIT VS. MANJULA SHAH. IN VIEW OF THE FACTS & CONTENTS OF THE ABOVE JUDGEMENT IT IS CRYSTAL CLEAR THAT THE INDEXA TION SHOULD BE ALLOWED FROM THE FINANCIAL YEAR 1981-82 ONLY. HOWEVER, AO DID NOT ACCEPT THE ABOVE EXPLANATION AN D OBSERVED THAT IN VIEW OF EXPLANATION 3 TO SEC.48 THE INDEXATION H AS TO BE ALLOWED ONLY FROM A.Y 2003-04. 3. ON APPEAL, LD. CIT(A) ALLOWED THE CLAIM OF THE A SSESSEE IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNA L IN THE CASE OF DY. CIT VS. MANJULA J. SHAH (2010) 35 SOT 105 (MUM) (S. B). 4. BEFORE US LD. DR RELIED ON THE ORDER OF THE AO. 5. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE S UBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DY. CIT VS. MANJULA J. SHAH (SUPRA0. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT IT IS NOT DISPUTED THAT ASSESSEE INHERITED THIS PROPERTY THRO UGH WILL FROM LATE SHRI BALKRISHNA D. KHOSLA WHO HAD PURCHASED THE SAI D PROPERTY ON MAY 8, 1958. THEREFORE, CLEARLY THE ASSESSEE WAS ENTITL ED TO THE BENEFIT OF ITA NO.5506 OF 2010 3 INDEXATION FROM 1-4-1981 IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DY. CIT VS. MANJULA J. SHAH (SUPRA). IN THIS CASE, IT WAS HELD AS UNDER: SECTION 48 OF THE INCOME-TAX ACT, 1961 CAPITAL GA INS COMPUTATION OF ASSESSMENT YEAR 2004-05 WHETHER FOR PURPOSE OF COMPUTING LONG-TERM CAPITAL GAINS IN HANDS OF AN ASSESSEE WHO HAS ACQUIRED AN ASSET UNDER A GIFT, INDEXED COST OF ACQUISITION OF SUCH CAPITAL ASSET IS TO BE COMPUTED WITH REFERENCE TO YEAR IN WHICH PREV IOUS OWNER FIRST HELD ASSET HELD, YES FOLLOWING THE ABOVE DECISION, WE DECIDE THIS ISSUE AGAINST THE REVENUE. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 4/10/2011. SD/- SD/- (VIJAY PAL RAO) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 14/10/2011. P/-*