INCOME TAX OFFICER (IT) 3(2)(1), MUMBAI V. SANJIV HIRA MIRCHANDANI, MUMBAI

ITA 573/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6571 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2014-2015
• Appeal Filed On: 31-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHANT SAMAIYA
• Keywords: Cost of acquisition; Set aside; Capital Gains
• Section: 143(3); 201

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI R.C. SHARMA ( A M) & SHRI PAWAN SINGH ( J M) I.T.A. NO. 57 3 /MUM/ 201 8 (ASSESSMENT YEAR 20 14 - 15 ) ITO(IT) - 3(2)(1) 16 TH FLOOR, ROOM NO. 1627, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400 021. V S . MR. SANJIV HIRA MIRCHANDANI 52, GITANJALI, COLABA BEHIND STRAND CINEMA MUMBAI - 400 005. PAN : AAJPM7567P ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI NISHANT SAMAIYA DATE OF HEARING 26 . 2 . 201 9 DATE OF PRONOUNCEMENT 26 . 2 . 201 9 O R D E R PER R.C. SHARMA (AM) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A) FOR A.Y. 2014 - 15 AGAINST THE ORDER PASSED U/S. 143(3) OF THE I.T. ACT, WHEREIN FOLLOWING GROUNDS HAS BEEN TAKEN BY THE REVENUE : - 1. WHET HER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) WAS ERRED IN INCLUDING THE PERIOD OF HOLDING OF THE ASSETS BY THE PREVIOUS OWNER FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN, WHEREAS THE INDEXED COST OF ACQU ISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE ASSESSEE HAD BECOME THE OWNER OF THE PROPERTY AFTER THE DEATH OF HIS FATHER AND MOTHER. 2. THE APPELLANT PRAYS THAT THE ORDER OF LEARNED CIT(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED . 2. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE ASSESSING OFFICER HAS DECLINED THE ASSESSEES CLAIM OF INDEXATION OF COST OF HOUSE WITH REFERENCE TO YEAR IN WHICH HIS LATE FATHER ACQUIRED TH E PROPERTY. S INCE PROPERTY WAS ACQUIRED BY THE ASSESSEES FATHER BEFORE A.Y. 1981 - 82 , THEREFORE INDEXATION WAS CLAIMED WITH REFERENCE TO A.Y. 1981 - 82. 2 3. BY THE IMPUGNED ORDER, LEARNED CIT(A) ALLOWED ASSESSEES CLAIM BY FOLLOWING DECISION OF HON'BLE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF MANJULA J. SHAH (2011) 16 TAXAMNN.COM 42 . 4. SIMILAR CASE HAS BEEN DECIDED BY US IN THE CASE OF MR. FIRDAUS D. MADON IN 574/MUM/2018 DATED 26.2.2019 , WHEREIN THE TRIBUNAL HELD AS UNDER : - THIS IS AN APPE AL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A) FOR A.Y. 2014 - 15, IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE INCOME TAX ACT. 2. GROUNDS TAKEN BY THE REVENUE READS AS UNDER : - 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN ERRED IN INCLUDING THE PERIOD OF HOLDING OF THE ASSETS BY THE PREVIOUS OWNER FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN, WHEREAS THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YE AR IN WHICH THE ASSESSEE HAD BECOME THE OWNER OF THE PROPERTY AFTER THE DEATH OF HIS PREVIOUS OWNER.' 2. 'THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' 3. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY.' 3. RIVAL CONTENTIONS HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE WAS JOINT OWNER OF AN ANCESTRAL RESIDENTIAL PROPERTY, KNOWN AS GOOL VILLA ALONGWITH HIS BROTHER MR. NAUSHAD MADON. THE ASSESSEE HAS HAD INHERITED 50% SHARE THEREIN. DURING THE YEAR THE ASSESSEE SOLD PROPERTY AND CLAIMED CAPITAL GAIN AS PER INDEXATION COST OF HOUSE RELATING TO F.Y. 1981 - 82. THE LEARNED ASSESSING OFFI CER VIDE HIS ORDER DATED 23.12.2016 HAS DISALLOWED THE APPELLANT'S CLAIM FOR INDEXATION FROM THE FINANCIAL YEAR 1981 - 82 ON THE GROUND THAT AS PER THE EXPLANATION (III) OF SECTION 48 OF THE INCOME TAX ACT, 1961 FOR COMPUTING THE INDEXED COST OF ACQUISITION, THE BASE YEAR HAS TO BE THE FIRST YEAR IN WHICH THE ASSET WAS HELD BY THE ASSESSEE AND NOT THE PREVIOUS OWNER OF THE ASSET. THE LEGAL FICTION OF THE PREVIOUS OWNER OF THE PROPERTY HAS BEEN CREATED ONLY FOR THE PURPOSE OF DETERMINING THE DATE OF ACQUISITIO N AND THE COST OF ACQUISITION. 4. BY THE IMPUGNED ORDER, LEARNED CIT(A) ALLOWED ASSESSEES CLAIM AFTER OBSERVING AS UNDER : - 3 I AGREE WITH THE SUBMISSION OF THE APPELLANT THAT THE DATE OF ACQUISITION OF THE PROPERTY SHOULD BE TAKEN 1981 - 82 WHEN THE FIRST OWNER PURCHASED IT. IN TERMS OF SECTION 49(1 )(2) OF THE IT ACT. THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS MANJULA SHAH IN APPEAL NO. 3378 OF 2010 HAS PUT TO REST THE CONTROVERSY. THE HON'BLE HIGH COURT HAS CATEGORICALLY GIVEN RULING THA T THE INDEX COST OF ACQUISITION HAS TO BE COMPUTED IN WHICH THE PREVIOUS OWNER HELD THE ASSET AND NOT THE YEAR IN WHICH THE APPELLANT BECOME THE OWNER OF THE ASSET. HENCE, I DIRECT THE AO TO RECOMPUTE CAPITAL GAINS BY TAKING THE INDEX COST OF ACQUISITION O F 1981 - 82. 5. AGAINST THE ABOVE ORDER OF LEARNED CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE US. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT THE PROPERTY WAS ACQUIRED BY THE ASSESSEE THROUGH INHERITANCE FROM HIS FATHER, THEREFORE WA S ELIGIBLE FOR INDEXATION OF COST AS PER THE YEAR OF HOLDING OF THE PROPERTY BY THE FATHER. SINCE FATHER WAS ACQUIRED PROPERTY PRIOR TO A.Y. 1981 - 82, THE ASSESSEE HAS CORRECTLY CLAIMED DEDUCTION AS PER INDEXED COST OF ACQUISITION IN A.Y. 1981 - 82 FOLLOWING THE HON'BLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT VS. MANJULA J. SHAH (16 TAXMAN 42), WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A). 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . 5. AS THE FACTS AND CIRCUMSTANCES A RE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL AS WELL AS ORDER OF HON'BLE HON'BLE JURISDICTIONAL HIGH COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A) FOR ALLOWING INDEXATION COST WITH REFERENCE TO COST OF ACQUISITION IN A.Y. 1981 - 82 , I N SO FAR AS PROPERTY WAS ACQUIRED BY LATE FATHER OF THE ASSESSEE PRIOR TO A.Y. 1981 - 82. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 28 . 2 . 201 9 . SD/ - SD/ - (PAWAN SINGH ) (R .C. SHARMA ) J U DICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 28 / 2 / 20 1 9 4 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// ( SENIOR P RIVATE S ECRETARY ) PS ITAT, MUMBAI