DCIT 17(2), MUMBAI V. SPV FAMILY TRUST, MUMBAI

ITA 6855/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9020 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 11-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Keywords: Capital asset; Gift; Cost of acquisition; Fair market value

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL EBENCH M UMBAI , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & PAWAN SINGH, JUDICIAL MEMBER ./I.T.A./6855/MUM/2014 , /ASSESSMENT YEAR: 2010-11 DCIT -17(2) ROOM NO.217, 2 ND FLOOR, INCOME TAX OFFICE, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400 012. VS. SPV FAMILY TRUST 20/18, SUDHIR KUNJ OPP. BEST QUARTERS, ROAD NO.37, WADALA MUMBAI-400 031. PAN:AAETS 9585 N ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: MS. BEENA SANTOSH -DR ASSESSEE BY: NONE / DATE OF HEARING: 10.01.2017 / DATE OF PRONOUNCEMENT: 10.01.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 21/08/2014 OF THE CIT ( A)-29,MUMBAI, THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL. ASSESSEE, AND AO P, FILED ITS RETURN OF INCOME ON 31/03/2011, DECLARING TOTAL INCOME OF RS. 1, 55, 91 , 350/-. THE AO COMPLETED THE ASSESSMENT ON 28/03/2013, U/S.143 (3) OF THE ACT, DETERMINING ITS INCOME AT RS. 2, 08, 50, 060/-. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT COMPUTATION OF CAPITAL GAINS ARISING ON TRANSFER OF CAPITAL ASSETS. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD SOLD THREE FLATS LOCATED AT WADALA (EAST), MUMBAI AND HA D SHOWN LONG-TERM CAPITAL GAIN (LTC G) OF RS. 1.55 CRORES ON THE SALE OF THE FLATS, THA T THE ASSESSEE HAD WORKED OUT THE LTC G BY TAKING THE BENEFIT OF INDEXATION ON THE PROPERTY BY TAKING THE COST OF ACQUISITION AS ON 01/04/1981. HE WAS OF THE OPINION THAT THE ASSESSEE WAS ENTITLED TO CLAIM INDEXATION FROM THE AY. 2003 04, THE YEAR IN WHICH THE ASSET WAS FIRS T HELD BY THE ASSESSEE AS PER THE PROVISIONS OF SECTION 48 (3) OF THE ACT,THAT THE ASSESSEE HAD ACQUIRED THE ASSET AS A GIFT, TO DETERMINE THE COST OF ACQUISITION IN SUCH CASES PROVISIONS OF SEC TION 49 OF THE ACT WERE TO BE APPLIED. HE CALLED FOR AN EXPLANATION FROM THE ASSESSEE IN THAT REGARD. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO HELD THAT BENEFIT OF INDEXATION ON THE PROPERTY WOULD BE AVAILABLE TO THE ASSESSEE FROM THE AY. 2003 04. ACCORDINGLY HE REW ORKED THE LTC G AT RS. 2.08 CRORES. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM, IT MADE ELABORATE SUBM ISSIONS AND REFERRED TO CERTAIN CASE 6855/M/14-SPV FAMILY TRUST 2 LAWS. IT WAS ARGUED BEFORE HIM THAT THE ISSUE STAND S COVERED IN ITS FAVOUR BY THE ORDER OF THE FAA IN ITS OWN CASE FOR THE AY. 2008 09 ON IDENTI CAL FACTS, THAT THE SAID ORDER OF THE FAA WAS FURTHER APPROVED BY THE TRIBUNAL BY ITS ORDER D ATED 10/08/2012. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ORDER OF THE ASSESSMENT, THE FAA HELD THAT THE PREVIOUS OWNER OF THE PROPERTY HELD T HE PROPERTY BEFORE 01/04/1981, THAT THE FAIR MARKET VALUE OF THE FLATS SAID TO BE TAKEN AS ON TH AT DAY, THAT INDEXATION HAD TO BE ALLOWED FROM THAT DATE. 4. DURING THE COURSE OF HEARING BEFORE US, THE DEPARTM ENTAL REPRESENTATIVE (DR) STATED THAT MATTER COULD BE DECIDED ON MERITS. AS STATED EARLIE R, NONE APPEARED ON BEHALF OF THE ASSESSEE. WE FIND THAT WHILE DECIDING THE APPEAL FOR THE AY. 2008 09, THE TRIBUNAL HAD DECIDED THE IDENTICAL ISSUE AS UNDER: 6.SINCE THE ISSUE IS NOW SQUARELY COVERED IN FAVOU R OF THE ASSESSEE BY THE ORDER OF HONORABLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANJULA J SHAH, 249 CTR 270 WIDE WHICH, HONORABLE HIGH COURT CONFIRMED THE DECISION OF THE TRIBUNAL (SUPRA). THE HONORABLE HIGH COURT HAS HELD THAT ITAT WERE JUSTIFIED IN HOLDING THAT WHILE COMPUTING CAPITAL GAINS ARISING ON TRANSFER OF CAPITAL ASSET, INTER ALIA, ACQUIRED BY THE ASSESSEE UNDER A GIFT THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET AND NOT THE YEAR IN WHICH THE ASSESS EE BECAME THE OWNER OF THE ASSET. SINCE IN THE CASE BEFORE US, THE DONOR ACQUIRED THE LAND UND ER CONSIDERATION BEFORE 1/4/1 981 AND THE ASSESSEE HAS RECEIVED THE SHARE IN THE SAID LAND UN DER A REGISTERED GIFT DEED 31/08/2002, WE HOLD THAT LD. CIT (A) HAS RIGHTLY HELD THAT INDEXED COST OF ACQUISITION OF THE LAND WITH REFERENCE TO THE YEAR AS ON 01/04/1981 IS TO BE CON SIDERED FOR COMPUTING CAPITAL GAINS. THEREFORE, WE AFFORD THE ORDER OF THE LD. CIT (A) B Y REJECTING THE GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT,DELIVERED IN THE CASE OF MANJULA J SHAH (SUPRA),WE UPHOLD THE ORDER OF THE FAA.EFFECTIVE GROUND OF APPEAL, RAISED BY THE AO, IS DECIDED AGAINST HIM. AS A RESULT, APPEAL FILED BY THE AO,STANDS DISMISSE D. . ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH JANUARY, 2017. 04 , 2017 SD/- SD/- ( ( ( ( /PAWAN SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 10.01.2017. JV.SR.PS. 6855/M/14-SPV FAMILY TRUST 3 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.