DCIT 16(3), MUMBAI V. GITA A RAVASIA, MUMBAI

ITA 7866/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8439 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 23-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 12-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMARD EEP
• Assessee Lawyers: P K BHAGWAGAR
• Keywords: Capital asset; Gift; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G , MUMBAI BEFORE SHRI I. P. BANSAL, JUDICIAL MEMBER AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO. : 7866/MUM/2010 ASSESSMENT YEAR : 2007-08 DCIT 16(3), MATRU MANDIR, 2 ND FLOOR, R. NO.206, TARDEO RD, MUMBAI-400 007 VS. SMT. GITA A RAVASIA 4 TH FLOOR, CUTCH CASTLE, OPERA HOUSE, MUMBAI-400 004 PAN NO: AJCPR 3310 H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A MAR DEEP RESPONDENT BY : SHRI P . K. BHAGWAGAR DATE OF HEARING : 2 3 .10.2012 DATE OF PRONOUNCEMENT : 23.10.2012 ORDER PER RAJENDRA SINGH, A.M. : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 25.08.2010 OF CIT(A)-27, MUMBAI FOR THE A.Y. 2007-0 8. THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING THE COMPUTATION OF COST OF ACQUISITION IN RESPECT OF THE PROPERTY WHILE COMPUTING THE CAPI TAL GAIN. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FOR THE A.Y. 2007-08 HAD DECLARED THE LONG TERM CAPITAL GAIN OF `. 1,43,72,856/- ON SALE OF FLAT AT MUMBAI. THE SAID FLAT HAD BEEN INHERITED BY THE AS SESSEE FROM HER MOTHER BY WAY OF WILL DATED 22.04.1997. THE ASSESS EE INHERITED THE FLAT ITA NO : 7866/MUM/2010 SMT. GITA A. RAVASIA 2 ON DATE OF DEATH OF HER MOTHER ON 26.05.2006. THE MOTHER OF THE ASSESSEE HAD GOT THE OWNERSHIP OF THE FLAT BY WAY O F GIFT FROM HER HUSBAND ON 15.02.1995. THE FATHER OF THE ASSESSEE WAS OWNER OF THE FLAT SINCE 1981. THE ASSESSEE, THEREFORE, COMPUTED THE INDEXED COST OF ACQUISITION OF THE FLAT USING THE COST INFLATION IN DEX ON 01.04.1981 AND THE COST INFLATION INDEX OF THE YEAR IN WHICH THE A SSET WAS TRANSFERRED, UNDER THE PROVISIONS OF SECTION 48(3). THE A.O. OB SERVED THAT THE ASSESSEE HAD HELD THE FLAT ONLY FROM 26.05.2006 AND , THEREFORE, THE COST INFLATION INDEX OF THAT YEAR WAS REQUIRED TO BE TAK EN AND NOT AS ON 01.04.1981. HE ACCORDINGLY COMPUTED THE LONG TERM CAPITAL GAIN AT `. 2,07,92,891/-. IN APPEAL, CIT(A) OBSERVED THAT THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE ASSESSEE SHALL ALSO INCLUDE T HE PERIOD FOR WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER IN VIEW OF THE PROVISION OF EXPLANATION 1(B) OF SECTION 2(42A). THE CIT(A) ACC ORDINGLY DIRECTED THE A.O. TO COMPUTE THE CAPITAL GAIN USING THE COST IND EX OF 01.04.1981. AGGRIEVED BY THE SAID DECISION, THE REVENUE IS IN A PPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REG ARDING COMPUTATION OF INDEXED COST OF THE PROPERTY SOLD BY THE ASSESSEE D URING THE YEAR FOR THE PURPOSE OF COMPUTATION OF LONG TERM CAPITAL GAIN. T HE PROPERTY HAD BEEN INHERITED BY THE ASSESSEE FROM HIS MOTHER ON HER DE ATH IN FINANCIAL YEAR ITA NO : 7866/MUM/2010 SMT. GITA A. RAVASIA 3 2006-07. THE MOTHER OF THE ASSESSEE HAD ACQUIRED TH E PROPERTY FROM THE FATHER OF THE ASSESSEE BY WAY OF GIFT ON 16.02.1995 . THE FATHER HAD ACQUIRED THE PROPERTY IN 1981. UNDER THE PROVISION S OF SECTION 49(1), IN CASE, THE ASSESSEE HAD ACQUIRED THE PROPERTY BY WAY OF INHERITANCE, GIFT, WILL ETC. THE COST OF ACQUISITION OF THE PROPERTY I S DEEMED TO BE THE COST FOR WHICH THE PREVIOUS OWNER HAD ACQUIRED THE PROPE RTY. FURTHER, UNDER THE PROVISIONS OF EXPLANATION-1(B) OF SECTION 2(42A ) WHILE COMPUTING HOLDING PERIOD OF CAPITAL ASSET, THE PERIOD FOR WHI CH THE ASSET WAS HELD BY PREVIOUS OWNER HAD TO BE INCLUDED IN CASE THE ASSET BECAME PROPERTY OF THE ASSESSEE UNDER THE PROVISIONS OF SECTION 49(1). THEREFORE, WHILE COMPUTING THE INDEXED COST OF ACQUISITION, THE ASSE T IS DEEMED TO BE HELD BY THE ASSESSEE FROM THE TIME THE ASSET WAS ACQUIRE D BY THE PREVIOUS OWNER. THEREFORE, THE INDEXED COST OF ACQUISITION I S REQUIRED TO BE COMPUTED WITH RESPECT TO COST OF INFLATION INDEX OF THE YEAR IN WHICH THE ASSET WAS ACQUIRED BY THE PREVIOUS OWNER. IN THIS C ASE THE PREVIOUS OWNER WHO WAS THE FATHER OF THE ASSESSEE HAD ACQUIR ED THE PROPERTY IN THE YEAR 1981 AND THEREFORE, COST INFLATION INDEX A S ON 1.4.1981 HAS TO BE USED FOR COMPUTATION OF INDEXED COST OF ACQUISIT ION. THIS VIEW IS SUPPORTED BY THE SPECIAL BENCH OF THE TRIBUNAL IN T HE CASE OF DCIT VS. MANJULA SHAH (318 ITR (AT) 417 ) WHICH HAS BEEN REC ENTLY UPHELD BY THE HON'BLE HIGH COURT OF BOMBAY VIDE ORDER DATED 11.10 .2011 AS REPORTED IN 16 TAXMANN.COM42. WE, THEREFORE, SEE NO INFIRMIT Y IN THE ORDER OF ITA NO : 7866/MUM/2010 SMT. GITA A. RAVASIA 4 CIT(A) IN ALLOWING THE CLAIM OF THE ASSESSEE BASED ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MANJUL A SHAH (318 ITR (AT) 417 ) (SUPRA). ACCORDINGLY THE ORDER OF CIT(A) IS U PHELD. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD OCTOBER, 2012. SD/ - SD/ - ( I. P. BANSAL ) ( RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 23.10.2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI