D.C.I.T. - 17(1), MUMBAI V. BHUPINDRA SINGH ANAND, MUMBAI

ITA 7743/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83795 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PERMANAND J
• Assessee Lawyers: BHUPENDRA SINGH ANAN D
• Keywords: Capital asset; Cost of acquisition; Fair market value

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , , BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMB ER . / ITA NO. 7743 /MUM./ 2012 ( / ASSESSMENT YEAR : 200 7 08 ) DY. COMMISSIONER OF INCOME TAX 17(1) 1 ST FLOOR, ROOM NO.113 PIRAMAL CHAMBERS LALBAUG, PAREL, MUMBAI .. / APPELLANT V/S SHRI BH UPINDRA SINGH ANAND PROP. OF AMAR PLASTIC INDUSTRIES 124, REAY ROAD, DARUKHANA MUMBAI 400 010 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AADPA6459N / ASSESSEE BY : SHR I BHUPENDRA SINGH ANAN D / REVENUE BY : SHRI PERMANAND J. / DATE OF HEARING 10 .09.2014 / DATE OF ORDE R 12.09.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL H AS BEEN PREFERRED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER DATED 1 5 TH OCTOBER 2012, PASSED BY THE LEARNED COMMISSIONER (APPEALS) XV II , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 14 3(3) OF THE INCOME TAX ACT, SHRI BHUPINDRA SINGH ANAND 2 1961 (FOR SHORT THE ACT ) FOR THE ASSESSMENT YEAR 20 07 08 , ON THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING THE INDEXATION ON COST OF ACQUISITION OF THE TENANCY RIGHTS AS ON 1.4.1981, WITHOUT TAKING INTO CONSIDERATION THE FACT THAT THE COST OF ACQUISITION OF TENANCY RIGHTS ACQUIRED BY THE PREVIOUS OWNER I.E., FATHER OF THE ASSESSEE WITHOUT ANY COST IN THE YEAR 1973 IS STOOD ITSELF AT NIL TO THE ASSESSEE AS ON 1.4.1981. 2. THE ASSESSEE IS AN INDIVIDUAL AND DURING THE YEAR HAS SOLD TENANTED PROPERTY FOR ` 55,28,600, AND THEREBY HAS SHOWN LONG TERM CAPITAL GAIN OF ` 25,85,870, ON SURRENDER OF THE TENANCY RIGHTS. THE TENANCY RIGHTS WAS ACQUIRED BY HIM ON THE DEATH OF HIS FATHER ON 11 TH APRIL 1986 , WHO HAD ACQUI RED IT MUCH EARLIER. THUS, WHILE COMPUTING THE CAPITAL GAIN THE ASSESSEE HAS ADOPTED THE COST FOR THE PURPOSE OF INDEXATION AS SUBSTITUTED BY THE MARKET VALUE AS ON 1 ST APRIL 1981, BASED ON VALUERS REPORT. THE ASSESSING OFFICER HELD THAT NO COST HAS BEEN INCURRED BY THE ASSESSEE IN THE ACQUISITION OF TENANCY RIGHTS AND, THEREFORE, T HE BENEFIT OF COST OF INFLATION INDEX CANNOT BE GIVEN. ACCORDINGLY, HE REJECTED THE INFLATED COST OF INDEX AT ` 29,42,730. 3. BEFORE THE LEARNED COMMISSIONER (APPEALS), IT WAS SUB MITTED THAT THE ASSESSEE HAD SOLD THE TENANCY RIGHTS OF THE OFFICE PREMISE FOR SUM OF ` 50,28,600. SINCE THE TENANCY RIGHTS WAS ACQUIRED BY HIS FATHER PRIOR TO 1 ST APRIL 1981, THEREFORE, THE FAIR MARKET VALUE AS ON 1 ST APRIL 1981, OF ` 5,61,000, WAS ADOPTE D. IT WAS FURTHER SUBMITTED THAT IN THE SAID OFFICE PREMISE , BUSINESS OF PARTNERSHIP FIRM WAS CARRIED OUT SHRI BHUPINDRA SINGH ANAND 3 BY THE ASSESSEE ALONG WITH HIS FATHER SHRI JASWANT SINGH ANAND SINCE 1968. AFTER HIS FATHER EXPIRED ON 11 TH APRIL 1986, THE PARTNERSHIP BUSINESS WAS D ISSOLVED AND THE BUSINESS WAS CONTINUED AS PROPRIETORSHIP CONCERN. THE LEARNED COMMISSIONER (APPEALS), AFTER EXAMINING THE ENTIRE HISTORY OF ACQUISITION OF TENANCY RIGHT AND THE BUSINESS CARRIED ON EARLIER BY THE PARTNERSHIP FIRM, HELD THAT THE TENANCY RIG HT WAS ACQUIRED MUCH BEFORE THE YEAR 1981 AND, THEREFORE, THE VALUE HAS TO BE ADOPTED AS ON 1 ST APRIL 1981, WHICH WAS VALUED AT ` 5,67,000. THUS, FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S MANJULA J. SHAH, [2011] 355 ITR 474 (BOM.), HELD THAT WHILE COMPUTING THE CAPITAL GAIN ARISING OUT OF CAPITAL ASSET ACQUIRED BY THE ASSESSEE FROM PREVIOUS OWNER, THE INDEX COST OF ACQUISITION HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH PREVIOUS OWNER HELD THE ASSET AND NOT THE YE AR IN WHICH THE ASSESSEE BECAME THE OWNER OF THE ASSET. HERE IN THIS CASE, THE ASSESSEE HAD BECOME THE OWNER ON DISTRIBUTION ON DISSOLUTION OF THE FIRM WHICH HAS TAKEN PLACE BEFORE 1 ST APRIL 19 81 AND, THEREFORE, FOLLOWING THE SAME RATIO, THE COST OF ACQUIS ITION SHOULD BE DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER OF THE PROPERTY HAD ACQUIRED IT. ACCORDINGLY, HE ALLOWED THE INDEXATION AS CLAIMED BY THE ASSESSEE. 4. BEFORE US, THE LEARNED DEPARTMENT REPRESENTATIVE STRONGLY RELIED UPON THE ORDER OF THE A SSESSING OFFICER. THE ASSESSEE REPRESENTED THE CASE IN PERSON. SHRI BHUPINDRA SINGH ANAND 4 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ALSO THE FINDING GIVEN IN THE IMPUGNED ORDER, WE FIND THAT THERE IS NO INFIRMITY IN THE FINDING AND THE CONCLUSION DRAWN BY THE LEARNED COMMISSIONER (APPEALS) AS NOW IN WAKE OF DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN MANJULA J. SHAH (SUPRA), IT IS QUITE SETTLED THAT WHILE COMPUTING THE CAPITAL GAIN ARISING OUT OF TRANSFER OF CAPITAL ASSET ACQUIRED BY THE ASSESSEE FROM THE PREVIOUS OWNER, T HE INDEX 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 ASSESSEE BECAME THE OWNER OF THE ASSET. HERE IN THIS CASE, IT IS UNDISPUTED FACT THAT THE TENANCY RIGH T WAS ACQUIRED BY HIS FATHER MUCH BEFORE 1 ST APRIL 1981, AND THE ASSESSEE BECAME THE OWNER ON DISTRIBUTION OF ASSETS ON DISSOLUTION OF THE FIRM IN VIEW OF SECTION 49(1)(III)(B), THEREFORE, THE COST OF ACQUISITION HAS RIGHTLY BEEN HELD TO BE ADOPTED FROM 1 S T APRIL 1981. THUS, THE ORDER OF THE LEARNED COMMISSIONER (APPEALS) IS AFFIRMED AND THE GROUND RAISED BY THE DEPARTMENT IS DISMISSED. 6. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 12 TH SEPTEMBER 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 12 TH SEPTEMBER 2014 SD/ - . . R.S. SHARMA ACCOUNTANT MEMBER S D/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 12 TH SEPTEMBER 2014 SHRI BHUPINDRA SINGH ANAND 5 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE ; (2) / THE REVENUE; (3) ( ) / THE CIT(A ) ; (4) / THE CIT, MUMBAI CITY CONCERNED ; (5) , , / THE DR, ITAT, MUMBAI ; (6) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI SHRI BHUPINDRA SINGH ANAND 6 DATE INITIAL ORIGINAL DICTATION PAID IS ENCLOSED AT THE END OF FILE 1. DRAFT DICTATED ON 10.9.2014 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 11.9.2014 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 11.9.2014 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 11.9.2014 J M/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 11.9.2014 SR.PS 6. DATE OF PRONOUNCEMENT 12.9.20 1 4 SR.PS 7. FILE SENT TO THE BENCH CLERK 15.9.2014 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER , / / 19997 98 2000 01 / / / / / / / / / /