Vishwanath Sharma, Zirakpur v. ACIT, Patiala

ITA 1059/CHANDI/2012 | 2008-2009
Pronouncement Date: 18-10-2013 | Result: Dismissed

Appeal Details

RSA Number 105921514 RSA 2012
Assessee PAN ALHPS6333E
Bench Chandigarh
Appeal Number ITA 1059/CHANDI/2012
Duration Of Justice 11 month(s) 29 day(s)
Appellant Vishwanath Sharma, Zirakpur
Respondent ACIT, Patiala
Appeal Type Income Tax Appeal
Pronouncement Date 18-10-2013
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 18-10-2013
Assessment Year 2008-2009
Appeal Filed On 19-10-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA JUDICIAL MEMBER ITA NOS.1056 TO 1059/CHD/2012 ASSESSMENT YEARS : 2004-05 2005-06 2007-08 & 2008 -09 SHRI VISHWANATH SHARMA V THE ACIT CENTRAL CIRCLE ZIRAKPUR PATIALA PAN NO. ALHPS6333E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI J.S.NAGAR DATE OF HEARING : 24.09.2013 DATE OF PRONOUNCEMENT : 18.10.2013 ORDER PER T.R. SOOD AM THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TH E SEPARATE ORDERS PASSED BY THE LD. CIT(A)-1 LUDHIANA DATED 7.8.2012 22.8.2012 & 24.8.2012. 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE W OULD LIKE TO WITHDRAW THE APPEALS IN ITA NOS. 1056 1058 & 1059/CHD/2012 AND AN ENDORSEMENT HAS BEEN MADE IN RESPECT OF SUCH WITHDR AWALS ON THE GROUNDS OF APPEAL IN THE RESPECTIVE APPEAL MEMO. 2 3. LD. DR DID NOT HAVE ANY OBJECTION THEREFORE TH ESE APPEALS ARE DISMISSED AS WITHDRAWN. ITA NO. 1057/CHD/2012 4. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 22 192/- (OUT OF RS. 43 953/-) MADE BY THE ASSE SSING OFFICER BY TAKING COST OF ACQUISITION OF PLOT MEASURING 1168 S Q. YARDS AT VILLAGE LOHGARH (IN WHICH ASSESSEE HAS 1/5 TH SHARE) AT RS. 31 355/- INSTEAD OF RS. 1 40 160/- TAKEN BY THE ASSESSEE FOR THE PUR POSE OF WORKING OUT CAPITAL GAIN AS PER PARA 8 OF THE ORDER. 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 95 484/- (OUT OF ADDITION OF RS. 2 17 072/-) MA DE BY THE ASSESSING OFFICER IN RESPECT OF SALE OF PLOT MEASURING 1025 S Q. YARDS IN VILLAGE LOHGARH BY ADOPTING THE COST OF ACQUISITION OF PLOT AT RS. 27 516/- INSTEAD OF RS. 1 23 000/- TAKEN BY THE ASSESSEE AS PER PARA 12 OF THE ORDER. 3. THAT ADDITION HAS BEEN UPHELD AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSION MADE BY US HAS NOT BEEN CONSIDERED PROPERLY 4. NOTWITHSTANDING ABOVE SAID GROUNDS OF APPEAL IT IS SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERIN G THAT NO ADDITION CAN BE MADE AS NO INCRIMINATING NATURE OF DOCUMENTS WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATION IN VIEW OF THE SPECIAL BENCH JUDGMENT IN THE CASE OF ALL CA RGO GLOBAL LOGISTICS LIMITED & OTHERS AS REPORTED IN 147 TTJ 5 13 5. OUT OF THE ABOVE GROUNDS GROUND NOS. 2 TO 4 WE RE NOT PRESSED BEFORE US AND THE SAME ARE DISMISSED AS NOT PRESSED . 3 6. GROUND NO.1: AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE HAS SOLD CERTAIN PLOTS FOR WHICH COST OF ACQUISITION HA D BEEN ADOPTED ON THE BASIS OF FAIR MARKET VALUE AS ON 1.4.1981 THEREFOR E THE ASSESSING OFFICER ISSUED A SHOW CAUSE NOTICE THAT WHY COST OF ACQUISI TION SHOULD NOT BE TAKEN IN TERMS OF CLAUSE (III) OF EXPLANATION TO SE CTION 48. NO REPLY WAS FILED AND THEREFORE THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS NOTHING TO SAY AND ACCORDINGLY ADOPTED THE COST OF ACQUISITION OF LAND WHICH WAS RECEIVED BY THE ASSESSEE FROM HIS MOTHER ON 25.3.2003 AS PER THE VALUATION ON THE DATE OF GIFT. ON APPEAL THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED BY THE LD. CIT(A). 7. BEFORE US LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F TRIBUNAL IN THE CASE OF VISHWANATH SHARMA V ACIT IN ITA NO. 956/CHD/2012 WHICH HAS BEEN FOLLOWED BY THE TRIBUNAL IN THE CASE OF PARWINDER K UMAR SHARMA V ACIT IN ITA NOS. 952 & 953/CHD/2012. 8. ON THE OTHER HAND THE LD. DR FOR THE REVENUE S UPPORTED THE ORDER OF LD. CIT(A). 9 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND T HAT THIS ISSUE WAS CONSIDERED BY THE SPECIAL BENCH IN CASE OF CIT V. MANJULA J. SHAH 68 DTR 269 (BOM) WHEREIN IT WAS HELD THAT IN DEXATION HAS TO BE APPLIED FROM THE DATE WHEN THE PREVIOUS OWNER AC QUIRED THE 4 ASSET. THIS POSITION HAS BEEN CONFIRMED BY HON'BLE BOMBAY HIGH COURT IN CASE OF CIT V. MANJULA J. SHAH 204 TAXMAN 691. HEAD NOTE OF THIS DECISION READS AS UNDER: CAPITAL GAINS COST OF ACQUISITION RELEVANT YEA R FOR INDEXATION VIS--VIS PROPERTY ACQUIRED UNDER GIFT- PROPERTY PURCHASED BY ASSESSEES DAUGHTER ON 29 TH JAN. 1993 GIFTED TO ASSESSEE ON 30 TH JUNE 2003 AS THE PREVIOUS OWNER HELD THE CAPITAL ASSET FROM 29 TH JAN. 1993 AS PER EXPLN. 1(I)(B) TO S. 2(42A) THE ASSESSEE IS DEEMED TO HAVE HELD THE CAPITAL ASSET AS LONG-TERM CAPITAL ASSET FROM 29 TH JAN. 1993 THEREFORE IN DETERMINING THE INDEXED COST O F ACQUISITION UNDER S. 48 THE ASSESSEE MUST BE TREATED TO HAVE HELD THE ASSET FRO M 29 TH JAN 1993 AND ACCORDINGLY THE COST INFLATION INDEX FOR 1992-93 WO ULD BE APPLICABLE IN DETERMINING THE INDEXED COST OF ACQUISITION- CONTEN TION OF REVENUE THAT AS THE ASSESSEE HELD THE ASSET W.E.F 1 ST FEB. 2003 THE FIRST YEAR OF HOLDING THE ASSET WOULD BE FINANCIAL YEAR 2002-03 AND ACCORDINGLY TH E COST INFLATION INDEX FOR 2002-03 WOULD BE APPLICABLE IS DEVOID OF MERIT BEC AUSE IN THAT CASE THE ASSESSEE WOULD NOT BE LIABLE FOR LONG-TERM CAPITAL GAINS TAX BY APPLYING THE DEEMED FICTION CONTAINED IN EXPLN. 1(I)(B) TO S. 2(42A) AND S.49(1 )(II)- IN CONSTRUING THE WORDS ASSET WAS HELD BY THE ASSESSEE IN CL.(III) OF S. 48 ONE HAS TO SEE THE OBJECT WITH WHICH THE SAID WORDS ARE USED IN THE STATUTE- IN TH E ABSENCE OF ANY INDICATION IN CL. (III) OF THE EXPLANATION TO S.48 THAT THE WORDS ASSET WAS HELD BY THE ASSESSEE HAVE TO BE CONSTRUED DIFFERENTLY THE SAID WORDS SH OULD BE CONSTRUED IN ACCORDANCE WITH THE OBJECT OF THE STATUTE THAT IS IN THE MANNER SET OUT IN EXPLN. 1(I)(B) TO S. 2(42A)- IF THE MEANING GIVEN IN S.2(4 2A) IS NOT ADOPTED IN CONSTRUING THE WORDS USED IN S.48 THEN THE GAINS ARISING ON T RANSFER OF A CAPITAL ASSET ACQUIRED UNDER A GIFT WILL BE OUTSIDE THE PURVIEW O F THE CAPITAL GAINS TAX AND THE PROVISION OF S.55(1)(B)(2)(II) WILL BECOME UNWORKAB LE. A SIMILAR VIEW WAS TAKEN BY THE HON'BLE DELHI HIGH COURT IN CASE OF ARUN SHUNGLOO TRUST 68 DTR 279 (DEL). HEAD NOTE O F THIS DECISION READS AS UNDER: CAPITAL GAINS- COST OF ACQUISITION RELEVANT YEAR FOR INDEXATION OF COST VIS-- VIS PROPERTY ACQUIRED UNDER GIFT TRUST ETC.- THER E IS NO REASON TO HOLD THAT CL.(III) OF THE EXPLANATION BELOW S.48 INTENTS TO REDUCE OR RESTRICT THE INDEXED COST OF ACQUISITION TO THE PERIOD DURING WHICH THE ASSESSE E HAS HELD THE PROPERTY AND NOT THE PERIOD DURING WHICH THE PROPERTY WAS HELD BY TH E PREVIOUS OWNER- HELD BY THE ASSESSEE USED IN EXPLN. (III) TO S.48 HAS TO B E UNDERSTOOD IN THE CONTEXT AND HARMONIOUSLY WITH OTHER SECTIONS- COST OF ACQUISITI ON STIPULATED IN S.49 MEANS THE COST FOR WHICH THE PREVIOUS OWNER HAD ACQUIRED THE PROPERTY TERM HELD BY THE ASSESSEE SHOULD BE INTERPRETED TO INCLUDE THE PERI OD DURING WHICH THE PROPERTY IN TRUST ON 5 TH JAN. 1996 WHICH PROPERTY WAS ACQUIRED BY THE PRE VIOUS OWNER SOMETIME BEFORE 1 ST APRIL 1981 ON SALE OF PROPERTY BY THE ASSESSEE I N ASST.YR.2001-02 IT WAS ENTITLED TO THE BENEFIT OF INDEXED COST OF ACQUISITION FROM 1 ST APRIL 1981 AND NOT FOR THE PERIOD ON OR AFTER 5 TH JAN. 1996. 5 HELD AS PER S.49 THE COST OF ACQUISITION IN THE HANDS O F AN ASSESSEE IS TREATED AS THE COST OF ACQUISITION BY THE PREVIOUS OWNER. SIMILAR BENEFIT / ADVANTAGE IS GIVEN IN RESPECT OF COST OF IMPROVEMENT. SECS. 48 AND 49 HAV E TO BE READ HARMONIOUSLY TO GIVE FULL EFFECT TO THE LEGISLATIVE INTENT. ON READ ING OF CL. (IV) OF EXPLANATION TO S.48 IT IS APPARENT THAT THE TERM COST OF IMPROVE MENT WOULD INCLUDE THE COST OF IMPROVEMENT(S) MADE BY THE PREVIOUS OWNER. THE BENE FIT OF INDEXED COST OF IMPROVEMENT WOULD BE AVAILABLE EVEN IF THE CAPITAL ASSET IS ACQUIRED BY THE ASSESSEE UNDER ANY GIFT WILL OR SUCCESSION TRUST ETC. AND IMPROVEMENT WAS MADE BY THE PREVIOUS OWNER. IF THE CONTENTION OF THE REV ENUE IS ACCEPTED THEN BENEFIT OF INDEXED COST OF ACQUISITION WILL NOT BE AVAILABLE T O AN ASSESSEE IN A CASE COVERED BY S.49 FROM THE DATE ON WHICH THE ASSET WAS HELD B Y THE PREVIOUS OWNER BUT ONLY FROM THE DATE THE CAPITAL ASSET WAS TRANSFER TO THE ASSESSEE. THIS WILL LEAD TO A DISCONNECT AND CONTRADICTION BETWEEN INDEXED COST OF ACQUISITION AND INDEXED COST OF IMPROVEMENT IN THE CASE OF CAPITAL ASSETS WHERE S.49 APPLIES. THIS CANNOT BE THE INTENTION BEHIND THE ENACTMENT OF S.49 AND E XPLANATION TO S.48. THERE IS NO REASON OR GROUND WHY THE LEGISLATIVE WOULD WANT TO DENY OR DEPRIVE AN ASSESSEE BENEFIT / ADVANTAGE OF THE PREVIOUS HOLDING FOR COM PUTING INDEXED COST OF ACQUISITION WHILE ALLOWING THE SAID BENEFIT FOR CO MPUTING INDEXED COST OF IMPROVEMENT. (PARAS 10 13 & 14) THE CONSTRUCTION PLACED BY THE REVENUE WILL LEAD TO INCONSISTENCY AND INCONGRUITIES WHEN ONE REFERS TO S.49 AND CL. (IV ) OF EXPLN. (1) TO S. 48. THIS WILL RESULT IN ABSURDITIES BECAUSE THE HOLDING OF PREDEC ESSOR HAS TO BE ACCOUNTED FOR THE PURPOSE OF COMPUTING THE COST OF ACQUISITION COST OF IMPROVEMENT AND INDEXED COST OF IMPROVEMENT BUT AS PER THE REVENUE NOT FOR THE PURPOSE OF INDEXED COST OF ACQUISITION. EVEN FOR THE PURPOSE OF DECIDI NG WHETHER THE TRANSACTION IS A SHORT-TERM CAPITAL GAIN OR LONG-TERM CAPITAL GAIN THE HOLDING BY THE PREDECESSOR IS TO BE TAKEN INTO CONSIDERATION. BENEFIT OF INDEX ED COST OF INFLATION IS GIVEN TO ENSURE THAT THE TAXPAYER PAYS CAPITAL GAIN TAX ON T HE REAL OR ACTUAL GAIN AND NOT ON THE INCREASE IN THE CAPITAL VALUE OF THE PRO PERTY DUE TO INFLATION. THIS IS THE OBJECT OR PURPOSE IN ALLOWING BENEFIT OF INDEXED CO ST OF IMPROVEMENT EVEN IF THE IMPROVEMENT WAS BY THE PREVIOUS OWNER IN CASES COVE RED BY S.49. ACCORDINGLY THERE IS NO JUSTIFICATION OR REASON TO NOT ALLOW TH E BENEFIT OF INDEXATION TO THE COST OF ACQUISITION IN CASES COVERED BY S.49. THIS IS NO T THE LEGISLATIVE INTENT BEHIND CL.(III) OF EXPLANATION TO S.48. THERE IS NO REASON AND JUSTIFICATION TO HOLD THAT CL.(III) OF THE EXPLANATION BELOW S.48 INTENTS TO R EDUCE OR RESTRICT THE INDEXED COST OF ACQUISITION TO THE PERIOD DURING WHICH THE ASS ESSEE HAS HELD THE PROPERTY AND NOT THE PERIOD DURING WHICH THE PROPERTY WAS HELD B Y THE PREVIOUS OWNER. THE INTERPRETATION RELIED BY THE ASSESSEE IS REASONABLE AND IN CONSONANCE WITH THE OBJECT AND PURPOSE BEHIND SS. 48 AND 49. THE EXPRES SION HELD BY THE ASSESSEE USED IN EXPLN. (III) TO S. 48 HAS TO BE UNDERSTOOD IN THE CONTEXT AND HARMONIOUSLY WITH OTHER SECTIONS. THE COST OF ACQUISITION STIPUL ATED IN S.49 MEANS THE COST FOR WHICH THE PREVIOUS OWNER HAD ACQUIRED THE PROPERTY. THE TERM HELD BY THE ASSESSEE SHOULD BE INTERPRETED TO INCLUDE THE PERI OD DURING WHICH THE PROPERTY 6 WAS HELD BY THE PREVIOUS OWNER. CIT VS. MANJULA J SHAH (2012) 68 DTR (BOM ) 269 CONCURRED WITH. 10. SIMILAR VIEW WAS TAKEN IN THE CASE OF PARWINDE R KUMAR SHARMA V ACIT (SUPRA). FOLLOWING THE ABOVE DECISION WE AR E OF THE OPINION THAT IN CASE CAPITAL ASSET HAS BEEN RECEIVED BY THE ASSESSEE BY WAY OF GIFT OR INHERITANCE THEN COST OF INFLATION INDEX HAS TO BE APPLIED FROM THE DATE WHEN SUCH ASSET WAS ACQUIRED BY THE P REVIOUS OWNER. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT( A) AND DIRECT THE ASSESSING OFFICER TO APPLY INFLATION INDEX AS P ER OUR OBSERVATIONS. RESULTANTLY ASSESSEES APPEAL IS PARTLY ALLOWED. 11. IN THE RESULT APPEAL IN ITA NOS. 1056 1058 & 1059/CHD/2012 ARE DISMISSED AND APPEAL IN ITA NO. 1057/CHD/2012 IS PA RTLY ALLOWED. ORDER PRONOUNCED ON 18.10.2013. SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 18 TH OCTOBER 2013 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR ITAT CHANDIGARH 7