INCOME TAX OFFICER(IT)-2(2)(1), MUMBAI V. SHRI HIRJI LALJI HIRANI, MUMBAI

ITA 5669/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7680 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2013-2014
• Appeal Filed On: 06-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Cost of acquisition; Fair market value; Tax effect
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH , MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER . / ITA NO. 5669 /MUM/201 7 ( / ASSESSMENT YEAR : 20 1 3 - 20 1 4 ) ITO(IT) - 2(2)(1), MUMBAI VS. SHRI HIRJI LALJI HIRANI, G - 7, AMIDHAVAL SOCIETY, HIGHWAY SERVICE ROAD, VILE PARLE(WEST), MUMBAI - 400057 ./ PAN NO. : A GPPH 3483 F ( / APPELLANT ) .. ( / RESPONDENT ) /REVENU E BY : SHRI MANOJ KUMAR SINGH , DR /AS SESSEE BY : SHRI RAHUL HAKANI , AR / DATE OF HEARING : 02 / 01 /201 9 / DATE OF PRONOUNCEMENT 10 / 01 /201 9 / O R D E R PER SHRI RAJESH KUMAR , A M : THIS AP PEAL BY REVENUE ARISES OUT OF THE ORDER OF THE CIT(A) 56 , MUMBAI, DATED 0 2.06.2017 , WHICH IN TURN HAS ARISEN OUT OF THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) RELATING TO A.Y. 2 0 1 3 - 201 4 . 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THE PRESENT APPEAL IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY THE AO BY REJECTING THE INDEXED COST OF ACQUISITION OF THE ASSESSEE CALCULAT ED ON THE BASIS OF FAIR MARKET VALUE OF THE PR OPERTY ON 01.04.1981 AS THE PROPERTY WAS DEVOLVED AND BEQUEATHED TO THE ASSESSEE IN 2005 BY HIS PARENT S . 3. FACTS IN BRIEF ARE THAT DURING THE YEAR THE ASSESSEE IS A NON - RESIDENT INDIAN HAVING INCOME FROM LONG TERM CAPITAL GAINS AND HAS ITA NO . 5669 / 1 7 2 EARNED INCOME IN THE FORM OF INTEREST FROM DEPOSITS. THE ASSESSEE SOLD A LAND AND BUILDING ON 17.09.2012 FOR A SALE CONSIDERATION OF RS.14,31,00,000/ - , WHICH WAS IN JOINT CO - OWNERSHIP WITH HIS BROTHER SHAVJI LALJI HIRANI AND ASSESSEES SHARE WAS 50% . THE ASSESSEE HAD TAKE N BENEFIT OF INDEXED COST OF ACQUISITION AND IMPROVEMENT OF RS.11,38,86,789/ - WHILE COMPUTING LONG TERM CAPITAL GAINS BY TAKING THE FMV ON 1.4.1981 . THE LAND & BUILDING WAS GIFTED BY THE PARENT TO THE ASSESSEE VIDE GIFT DEED DATED 30.12.2005. THE SAID LAN D WAS PURCHASED BY SMT. RAMBAI LALJI HIRANI AND LALJI LAXMAN HIRANI, PARENTS OF ASSESSEE IN THE YEAR 1968. THEREAFTER BUILDING WAS CONSTRUCTED BY THE PARENTS OF ASSESSEE ON THE SAID LAND, WHICH TOOK PLACE IN BETWEEN FROM F.Y. 1993 - 94 TO F.Y. 1998 - 99. THE C OST OF CONSTRUCTION AND IMPROVEMENT IS CONSIDERED WHILE COMPUTING CAPITAL GAINS AND ALSO INDEXATION BENEFIT IS AVAILED FROM THE YEAR OF INCURRENCE. S INCE THE LAND WAS PURCHASED BEFORE 01.04.19 81, MARKET VALUE OF LAND WAS DET ERMINED AT RS.75,60,000/ - AS PER THE VALUATION CERTIFICATE PROVIDED BY THE GOVERNMENT APPROVED VALUER. THE COPY OF AFORESAID AGREEMENT, GIFT DEED AND VALUATION CERTIFICATE WERE ALSO SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS VIDE LETTER DATED 29.12.2015 AND 10. 02.2016. THE AO IN THE ASSESSMENT ORDER STATED THAT THE ASSET HAS BEEN ACQUIRED BY THE ASSESSEE IN F.Y.2005 - 06 AND THE INDEXATION ON COST SHOULD BE ALLOWED FROM THE YEAR OF ACQUISITION I.E. F.Y.2005 - 06 , THEREFORE, AO CALCULATED INDEXED COST ON RS.47,910/ - AS PER THE ACTUAL PURCHASE PRICE INCURRED BY PARENTS IN 1968, THEREBY IGNORING THE FMV OF RS.75,60,000/ - ON ITA NO . 5669 / 1 7 3 01.04.1981. THE ASSESSEE CLAIMED EXEMPTION U/S.54EC OF RS.50,00,000/ - AND U/S.54 AT RS.3.63.64.791/ - AGAINST THE LONG TERM CAPITAL GAIN, HOWEVER , THE AO MADE ADDITION OF RS.4,33,30,016/ - TO THE CAPITAL GAINS AND RESTRICTED THE DEDUCTION U/S.54 TO RS.2,05,06,200/ - BY FRAMING ASSESSMENT U/S.143(3) OF THE ACT, VIDE ORDER DATED 28.03.2016. 4. IN THE APPELLATE PROCEEDINGS, LD. CIT(A) ALLOWED THE APP EAL OF THE ASSESSEE BY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF `CIT VS. MANJULA J. SHAH(BOMBAY), 204 TAXMAN 691. 5. LD. AR, AT THE OUTSET, SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MANJULA J. SHAH(BOMBAY) (SUPRA), WHEREIN THE HONBLE BOMBAY HIGH COURT HAS HELD THAT WHERE THE ASSESSEE IS BEQUEATHED THE PROPERTY BY WAY OF WILL, THEN THE INDEXED COST HAS TO BE CALCULATED BY TAKING TH E PERIOD OF HOLDING OF THE PREVIOUS OWNER FROM WHOM THE ASSESSEE HAS INHERITED THE PROPERTY. LD. AR SUBMITTED THAT THE AO DID NOT FOLLOW THE DECISION OF HONBLE BOMBAY HIGH COURT ON THE GROUND THAT THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE HONBLE SUP REME COURT AGAINST THE DECISION OF HONBLE BOMBAY HIGH COURT. LD. AR ALSO SUBMITTED COPY OF THE ORDER PASSED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. MANJULA J. SHAH(DEAD) THROUGH LRS, IN CIVIL APPEAL ARISING OUT OF SPECIAL LEAVE PETITION (C) NO .19924/2012 AND 8184/2014, DATED 18.09.2018, WHICH HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT FOR THE LOW TAX EFFECT OF LESS THAN RS.1 CRORES AS PER THE CIRCULAR DATED 11.07.2018 AS AMENDED BY CIRCULAR DATED 20.08.2018. LD. ITA NO . 5669 / 1 7 4 AR, THEREFORE, PRAYED BEFOR E THE BENCH THAT THE APPEAL OF THE REVENUE SHOULD BE DISMISSED AS SAME IS AGAINST THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN MANJULA J. SHAH (SUPRA) AND THE APPEAL AGAINST THE SAID ORDER HAS ALSO BEEN DISMISSED BY THE HONBLE SUPREME COURT. 6 . LD. DR, ON THE OTHER HAND, APPEARED TO BE FAIR AND AGREED TO THE ARGUMENTS OF THE LD. AR. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DECISION CITED BY THE LD. AR AND COPY OF THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF HONBLE BOMBAY HIGH COURT IN THE CASE OF MANJULA J. SHAH (SUPRA) . WE OBSERVE FROM THE ORDER OF AO THAT THE AO HAS NOT FOLLOWED THE BINDING DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE ABOVE CASE ON THE GROUND THAT REVENUE HAS FILED APPEAL BEFORE THE HONBLE SUPREME COURT AGAINST THE SAID ORDER. LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE ON THE GROUND OF RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE ABOVE DECISION BEING A BINDING DECISION IN VIEW OF THE JURISDICTIONAL HIGH COURT . LD. CIT(A) HAS PASSED A REASONED AND SPEAKING ORDER WHICH IN ANY CASE IS ALSO HAVE THE AUTHORITY OF THE HONBLE HIGH COURT AS THE APPEAL OF THE REVENUE HAS BEEN DISMISSE D BY THE HONBLE SUPREME COURT AND THE DECISION OF HONBLE BOMBAY HIGH COURT HAS ATTAINED ITS FINALITY. IN VIEW OF THESE FACTS, WE HOLD THAT THE ORDER PASSED BY THE CIT(A) IS CORRECT AND PROPER, WHICH ITA NO . 5669 / 1 7 5 REQUIRES NO INTERFERENCE AT OUR END. ACCORDINGLY, WE DISMISS THE GROUNDS RAISED BY THE REVENUE. 8 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 10 / 01 /201 9 . SD/ - ( RAM LAL NEGI ) S D/ - (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 10 / 01 /201 9 . . / PRAKASH KUMAR MISHRA , S R.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSISTANT REGISTRAR ) , / ITAT, MUMBAI 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), MUMBAI 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//