ACIT 19(2), MUMBAI V. KEKIN SHETH, MUMBAI

ITA 5647/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7451 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 19-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Keywords: Capital asset; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI N.K. PRADHAN , HON'BLE ACCOUNTANT MEMBER ITA NO . 5647 /MUM/2016 (A.Y : 2011 - 12 ) A.C.I.T. 19(2) R.NO. 207 , MATRU MANDIR MUMBAI 400 0 07 V . KEKIN SHETH 302, PLEASANT PARK, 65, PEDDAR ROAD, MUMBAI 400026 PAN NO : CLMPS 0587 D (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI POOJA SWAROOP DATE OF HEARING : 18.04.2018 DATE OF PRONOUNCEMENT : 25 .04 .2018 O R D E R PER C.N. PRASAD , JUDICIAL MEMBER 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 30 , MUMBAI DATED 23.06.2016 FOR THE ASSESSMENT YEAR 2011 - 12 . 2. THE ONLY ISSUE IN THE APPEAL OF THE REVENUE IS REGARDING ALLOWING THE INDEXATIONS ON COST OF ACQUISITION W.E.F. 01.04.1981 INSTEAD OF THE 2 ITA NO.5647/MUM/2016 (A.Y: 2011 - 12) KEKIN SHETH FINANCIAL YEAR 1996 - 97 WHEN THE PROPERTY WAS PASSED ON TO THE ASSESSEE. 3. INSPITE OF ISSUE OF NOTICE NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT WAS SOUGHT. SINCE THE ISSUE IN APPEAL HAS BEEN DECIDED BY THE HON'BLE JURISDICTIONAL HIGH COURT WE PROCEED TO DISPOSE OF THE APPEAL ON HEARING THE LD.DR. 4. BRIEFLY STATED THE FACTS ARE THAT, O N 29.11.1996 THE PROPERTY WHICH WAS PURCHASED IN THE YE A R 1967 BY ASSESSEES FATHER WAS PASSED ON TO THE ASSESSEE . THE ASSESSEE DURING THE CURRENT ASSESSMENT YEAR SOLD THE SAID PROPERTY AND W HILE COMPUTING THE CAPITAL G AINS THE ASSESSEE APPLIED INDEXATION FROM 01.04.1981 WHICH THE ASSESSING OFFICER DENIED. ACCORDING TO THE ASSESSING OFFICER THE INDEXATION SHOULD BE GIVEN FROM 29.11.1996 WHEN THE PROPERTY WAS PASSED ON TO THE ASSESSEE AND NOT FROM 01.04.1981. THE ASSESS EE CONTENDED THAT SINCE HE HAS INHERITED THE PROPERTY FROM HIS FATHER WHICH WAS PURCHASED IN THE YEAR 1967 THE ASSESSEE SHOULD GET INDEXATION OF THE PROPERTY FROM 1981 IN VIEW OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. MANJULA J . SHAH [355 ITR 474]. HOWEVER, THE ASSESSING OFFICER OBSERVING THAT T HE DECISION OF THE BOMBAY HIGH COURT IS NOT ACCEPTED BY THE DEPARTMENT , WORKED OUT T HE INDEXATION FROM THE F.Y. 1996 INSTEAD OF 1981. ON APPEAL 3 ITA NO.5647/MUM/2016 (A.Y: 2011 - 12) KEKIN SHETH THE LD.CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. MANJULA J. SHAH (SUPRA) AGA INST WHICH THE REVENUE IS IN APPEAL BEFORE US. 5. LD. DR VEHEMENTLY SUPPORTED THE OR DERS OF THE ASSESSING OFFICER. 6. ON A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT , WE FIND THAT THE ISSUE IN APPEAL IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. MANJULA J. SHAH (SUPRA) WHICH DECISION WAS FOLLOWED BY THE LD.CIT(A) AND ALLOWED T HE CLAIM OF THE ASSESSEE OBSERVING AS UNDER: 4.1. I HAVE PERUSED THE F ACTS OF THE CASE MATERIAL AVAIL ABLE ON RECORD AND ALSO THE DECISIONS OF THE HON'BLE ITAT AND THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. MANJULA J. SHAH (2011) 16 TAXMAN.COM 42. IN THE SAID DECISION THE JURISDICTIONAL HIGH COURT HELD AS UNDER: - 'HELD, DISMISSING THE APPEAL, (I ) THAT WHEN THE LEGISLATURE BY INTRODUCING THE DEEMING FICTION SEEKS TO TAX THE GAINS ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIRED UNDER A G IFT OR WILL THE CAPITAL GAIN U/S. 48 HAVE T O BE COMPUTED APPLYING THE DEEMED FICTION. THEREFORE, T HE FI CTION CONTAINED IN EXPLANATION 1(I)(B) TO SECTION 2(42A) HAS TO BE APPLIED IN DETERMINING THE INDEXED COST OF ACQUISITION UNDER SECTION 48. (II) THAT BY APPLYING THE DEEMING PROVISION CONTAINED IN EXPLANATION 1 (I) ( B) TO SECTION 2(42A) THE ASSESSES W AS DEEMED TO HAVE HELD THE ASSET FROM JANUARY 29, 1993 TO JUNE 30, 2003 BY INCLUDING THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER AND, ACCORDINGLY, HELD LIABLE F OR LONG TERM CAPITAL GAINS TAX. WHILE COMPUTING THE CAPITAL GAINS, THE INDEX ED COST OF ACQUISITION HAD TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET AND NOT THE YEAR IN WHICH THE ASSESSES BECAME THE OWNER OF THE ASSET'. 4.2 . THE FACTS OF THE ABOVE CITED CASE ARE SIMILAR TO THE PRESENT CASE. IN THE PRESENT CASE THE APPELLANT GOT POSSESSION OF THE FLAT IN THE YEAR 1996 THROUGH SUCCESSION. HOWEVER, THE PROPERTY WAS HELD BY THE APPELLANT'S FATHER SINCE 1967. IN THE SIMILAR CIRCUMSTANCES, HON'BLE BOMBAY HIGH COURT HELD THAT, WHILE COMPUTI NG THE CAPITAL GAINS, THE INDEXATION COST OF ACQUISITION HAD TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET. THE PROPERTY HAD TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE A SSET AND NOT THE YEAR IN WHICH THE ASSESSEE BECOME THE OWNER OF 4 ITA NO.5647/MUM/2016 (A.Y: 2011 - 12) KEKIN SHETH THE ASSET: THE ABOVE DECISION DELIVERED BY THE JURISDICTIONAL HIGH COURT IS BINDING ON ALL LOWER AUTHORITIES IN THE STATE, TILL THE SAME IS DISTINGUISHED BY THE HIGHER JUDICIAL FORUM. AS ON DATE, NO SUCH CONTRARY VIEW TAKEN BY THE APEX COURT IN THE CITED CASE, IN VIEW OF THE SAME, RESPECTFULLY FOLLOWING THE DECISION, AO IS DIRECTED TO ADOPT THE VALUE AS IN 1981, TO WORK OUT THE INDEXATION, AS THE PROPERTY WAS HELD BY HIS FATHER SINCE 1967, PR IOR TO APPELLANT BECOMING THE OWNER OF THE PROPERTY IN 1996. ACCORDINGLY, THE GROUND OF APPEAL IS TREATED AS ALLOWED AND THE APPELLANT SUCCEEDS ON THE GROUNDS OF APPEAL. 7. IN VIEW OF THE ABOVE DISCUSSION , WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A). THE GROUND S RA ISED BY THE REVENUE ARE REJECTED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 25 TH APRIL , 2018 . SD/ - SD/ - ( N. K. PRADHAN ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 25 / 04 / 201 8 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASSTT. REGISTRAR) ITAT, MUM