INCOME TAX OFFICER (IT)-2(1)(1), MUMBAI V. SHRI HARISH DIALDAS DALAMAL, MUMBAI

ITA 5742/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7670 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2014-2015
• Appeal Filed On: 08-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Share purchase agreement; 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. 5742 /MUM/201 7 ( / ASSESSMENT YEAR : 20 14 - 20 1 5 ) ITO(IT) - 2(1), MUMBAI VS. SHRI HARISH DIALDAS DALAMAL, 1501, DALAMAL TOWERS, NARIMAN POINT, CHURCHGATE, MUMBAI - 400021 ./ PAN NO. : A EBPD 8408 A ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI MANOJ KUMAR SINGH , DR /AS SESSEE BY : SHRI HARI S. RAHEJA, AR / DATE OF HEARING : 02 / 01 /201 9 / DATE OF PRONOUNCEMENT 09 / 01 /201 9 / O R D E R PER SHRI RAJESH KUMAR , A M : THIS APPEAL BY REVE NUE ARISES OUT OF THE ORDER OF THE CIT(A) 56 , MUMBAI, DATED 29.06.2017 , 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. 20 14 - 201 5 . 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 BY THE ASSESSEE CALCULAT ED ON THE BASIS OF FAIR MARKET VALUE OF THE PROPERTY ON 01. 04.1981 AS THE SHARE IN THE PROPERTY BEQUEATHED TO THE ASSESSEE IN 1994 ON THE DEATH OF HIS FATHER. ITA NO . 5742 / 1 7 2 3. FACTS IN BRIEF ARE THAT DURING THE YEAR THE ASSESSEE SOLD A FLAT IN WHICH HIS SHARE WAS 50% WHICH WAS LOCATED ON 17 TH FLOOR IN DALAMAL APARTMENTS . THE S AID FLAT WAS PURCHASED BY HIS MOTHER SMT. GUNWANTI DIALDAS AS EVIDENCE D SHARE CERTIFICATE ON 27.06.1994. THE MOTHER OF THE ASSESSEE SMT. GUNWANTI DIALDAS BEQUEATHED HER FLAT TO HER TWO SONS SHRI HARISH DALAMAL AND SHRI JAGDISH DALAMAL IN EQUAL SHARES AS PER HER WILL DATED 02.07.1994. THE SAID SALE WAS EFFECTED BY THE ASSESSEE ON 29 TH JULY, 2013 FOR THE CONSIDERATION OF RS.15.85 CRORES AND THE ASSESSEES SHARE WAS RS.7,92,50,000/ - . THE ASSESSEE CALCULATED THE CAPITAL GAIN OF THE SAID PROPERTY BY TAKING FAI R MARKET VALUE AS ON 01.04.1981 AT RS.23,99,000/ - AS PER THE VALUATION CERTIFICATE ISSUED BY THE GOVERNMENT APPROVED REGISTERED VALUER M/S KISHORE KARAMSEY & CO. AND CALCULATED THE INDEXED COST OF RS.2,25,26,610/ - BY TAKING THE FAIR MARKET VALUE AS ON 01. 04.1981 AS THE ASSESSEE BECAME THE OWNER OF THE PROPERTY UPON DEATH OF HIS MOTHER ON 23.09.2010. THE ASSESSEE CALCULATED THE LONG TERM CAPITAL GAIN AT RS.6,73,34,265/ - AFTER CLAIMING THE SALE EXPENSES AND INDEXED COST WHICH WAS REJECTED BY THE AO AND THE A O RECALCULATED THE LONG TERM CAPITAL GAIN AT RS.7,70, 13,420/ - BY REJECTING THE VALUATION AS ON 01.04.1981. THE COST OF ACQUISITION WAS CALCULATED BY THE AO AT RS.15,84,150/ - BY TAKING THE VALUE AS ON 01.04.1981 AND ADJUSTED THE SAME TO THE INDEX OF F.Y.201 0 - 2011 AND THUS, THE COST OF ACQUISITION WAS CALCULATED AT RS.31,68,300/ - OF WHICH ONE HALF DELVED TO THE ASSESSEE S SHARE . THE ASSESSEE HAS CLAIMED EXEMPTION U/S.54 OF THE ACT BY MAKING INVESTMENTS TO THE TUNE OF RS.2 CRORES IN CAPITAL GAIN SCHEME AND, T HUS, ITA NO . 5742 / 1 7 3 CALCULATED THE CAPITAL GAIN AT RS.4,73,34,265/ - , WHEREAS THE AO WORKED OUT CAPITAL GAIN AT RS.5,70,13,420/ - . THUS, THE BALANCE OF RS.96,79,155/ - IS ADDED IN THE HANDS OF THE ASSESSEE AS LONG TERM CAPITAL GAIN ON SALE OF FLAT BY FRAMING THE ASSESSMENT U/S.143(3) OF THE ACT, DATED 30.11.2016. 4. IN THE APPELLATE PROCEEDINGS, LD. CIT(A) ALLOWED THE APPEAL 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 HONBLE 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 ASSESS EE IS BEQUEATHED THE PROPERTY BY WAY OF WILL, THEN THE PERIOD FOR WHICH THE ASSESSEE HELD THE PROPERTY SHALL BE CALCULATED FROM THE DATE FROM WHICH THE PREVIOUS OWNER HELD THE PROPERTY AND INDEXED COST HAS TO BE CALCULATED BY INDEXING THE COST FROM THAT DATE . 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 SUPREME COURT AGAINST THE DECISION OF HONBLE BOMBAY HIGH COURT. LD. AR ALSO SUBMITTED COP Y 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 HA VE BEEN DISMISSED BY THE HONBLE S UPREME 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 . 5742 / 1 7 4 AR, THEREFORE, PRAYED BEFORE THE BENCH THAT THE APPEAL OF THE REVENUE SHOULD BE DISMISSED AS THE SAME IS CONTRARY TO THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN MANJULA J. SHAH (SUPRA) THE APPEAL AGAINST WHICH HAS ALSO BEEN DISMISSED BY THE HONBLE SUPREME COURT. 6. LD. DR, ON THE OTHER HAND, APPEARED TO BE FAIR LY AGREED TO THE ARGUMENTS OF THE LD. A R. 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 OF THE HONBLE SUPREME COURT IN THE CASE OF APPEALS FILED BY THE REVENUE AGAINST THE ORDE R 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 T HE HONBLE SUPREME COURT AGAINST THE SAID ORDER. LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE FOLLOWING THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE ABOVE DECISION. 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 DISMISSED 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 IN WHICH OUR INTERFERENCE IS NOT REQUIRED. ACCORDINGLY, WE DISMISS THE GROUNDS RAISED BY THE REVENUE. ITA NO . 5742 / 1 7 5 8 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 09 / 01 /201 9 . SD/ - ( RAM LAL NE GI ) S D/ - (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 09 / 01 /201 9 . . / PRAKASH KUMAR MISHRA , S R.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSISTANT REGISTRAR ) , / ITAT, MUMBAI 1. / THE APPE LLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), MUMBAI 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//