ITO(IT)-2(1), Kolkata, Kolkata v. Smt. Shashi Marodia, Kolkata

ITA 1740/KOL/2010 | 2007-2008
Pronouncement Date: 28-07-2011 | Result: Dismissed

Appeal Details

RSA Number 174023514 RSA 2010
Assessee PAN AFKPM3373F
Bench Kolkata
Appeal Number ITA 1740/KOL/2010
Duration Of Justice 10 month(s) 21 day(s)
Appellant ITO(IT)-2(1), Kolkata, Kolkata
Respondent Smt. Shashi Marodia, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 28-07-2011
Assessment Year 2007-2008
Appeal Filed On 06-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . ! '# '# '# '# /AND ' # ! ) [BEFORE HONBLE SHRI S. V. MEHROTRA AM & HONBLE S RI MAHAVIR SINGH JM] #$ #$ #$ #$ / I.T.A NO. 1740/KOL/2010 %& ''( %& ''( %& ''( %& ''(/ // / ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER (INTERNATIONAL VS. SMT. SHAS HI MARODIA TAXATION)-2(1) KOLKATA. (PAN-AFKPM 3373 F) (*+ /APPELLANT ) ( -*+/ RESPONDENT ) FOR THE APPELLANT: SHRI S. K. ROY FOR THE RESPONDENT: N O N E . / ORDER PER MAHAVIR SINGH JM ( ' # ' # ' # ' # ! ! ! ! ) THIS APPEAL BY REVENUE IS ARISING OUT OF THE ORDER OF CIT(A)-VI KOLKATA IN APPEAL NO.21/CIT(A)-VI/09-10/INT. TAXATION-2(1)/KOL DATED 21.06.2010. ASSESSMENT WAS FRAMED BY ITO INTERNATIONAL TAXATION-2(1) KOLKATA U/S. 201( 1) & 201(1A) R.W.S. 195 OF THE INCOME-TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) VI DE HIS ORDER DATED 11.11.2009. 2. THE SOLE ISSUE IN THIS APPEAL OF THE REVENUE IS AGAINST THE ORDER OF CIT(A) IN DETERMINING THE COST OF ACQUISITION WHEN THE PROPER TY WAS INHERITED OR WHEN THE PREVIOUS OWNER ACQUIRED THE PROPERTY. FOR THIS REVENUE HAS RAISED FOLLOWING FOUR GROUNDS: 1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN HOLDING THAT IN DETERMINING THE INDEX COST OF ACQUI SITIONS OF A PROPERTY THE PERIOD OF HOLDING OF THE ASSET BY THE PREVIOUS OWNER IN THE CASE OF INHERITED PROPERTY SHOULD BE TAKEN INTO ACCOUNT IN APPLYING THE COST INFLATION I NDEX. 2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE INDEX COST OF ACQUISITION IN THIS CASE HAS TO BE COMPUTED BY APPLYING THE COST INFLATION INDEX FOR THE F.Y 1981-82 AND NOT 20 05-06 I.E. THE YEAR IN WHICH THE ASSET WAS FIRST HELD BY THE SELLER AS PER EXPLANATION (II I) TO SEC. 48 OF THE ACT. 3) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE APPELLANT IS NOT REQUIRED TO WITHH OLD TAX AS PER PROVISION OF SEC. 195. 4) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN DIRECTING THE A.O. TO DELETE THE AMOUNT CHARGED U/S . 201(1) & 201(1A) OF THE ACT. 2 ITA 1740/K/2010 SMT. SHASHI MARODIA A.Y.07-08 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. THE BRIEF FACTS ARE THAT ASSESSEE PURCHASED A HOUSE PROPERTY ON 30.11.2006 FROM SANJAY BANERJEE VIDE CONVEYANCE DEED REGISTERED WITH SUB-R EGISTRAR. ACCORDING TO ASSESSING OFFICER SHRI SANJOY BANERJEE IS AN NRI AND GOT THIS PROPERT Y ON SUCCESSION FROM HIS FATHER MANOJ KANTI BANERJEE WHO EXPIRED ON 18.2.2006 AND MANOJ KANTI BANERJEE ACQUIRED THIS PROPERTY FROM HIS MOTHER IN 1970 AND ALL THESE FACTS ARE REF LECTED IN THE CONVEYANCE DEED. ASSESSING OFFICER INDEXED THE PROPERTY BY TAKING THE HOLDING PERIOD OF ASSESSEE AS ON 18.2.2006 AND NOT AS ON 1.4.1981 AND ACCORDINGLY COMPUTED LONG TERM CAPITAL GAINS AND TREATED THE ASSESSEE IN DEFAULT IN VIEW OF THE PROVISIONS OF SECTIONS 201(1 ) AND 201(1A) OF THE ACT. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO DELETE D THE ADDITION BY HOLDING THAT ASSESSEE ACQUIRED THIS PROPERTY AS SPECIFIED IN SECTION 49 O F THE ACT AND COST INFLATION INDEX AND COST OF ACQUISITION I.E. FAIR MARKET VALUE AS ON 1.4.1981 H AS TO BE ADOPTED FOR COMPUTING LONG TERM CAPITAL GAINS IN THE CASE OF THE ASSESSEE AND FINAL LY HELD THAT TREATING THE ASSESSEE IN DEFAULT U/S. 201(1) AND 201(1A) OF THE ACT IS WITHOUT ANY BASIS IN HIS APPELLATE ORDER AS UNDER: I HAVE GONE THROUGH THE SUBMISSIONS OF THE APPELLA NT THE ORDER OF THE A.O. AND ALSO THE REMAND REPORT OF A.O. AS PROVIDED IN SEC.48 TH E COST OF ACQUISITION OF THE ASSET IS TO BE DEDUCTED FROM THE FULL VALUE OF THE CONSIDERA TION RECEIVED OR RECEIVABLE AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AND SUC H COST WITH REFERENCE TO CERTAIN MODES OF ACQUISITION IS SPECIFIED IN SEC. 49. AS PER EXPL ANATION 1(B) TO SEC.2 (42A) IN THE CASE OF A CAPITAL ASSET WHICH BECOMES THE PROPERTY OF THE ASSESSEE UNDER GIFT THERE SHALL BE INCLUDED IN DETERMINING THE PERIOD FOR WHI CH ANY CAPITAL ASSET IS HELD BY THE ASSESSEE THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER. SECTION 49 OF THE ACT SPELLS OUT THE COST OF ACQUISITION WITH REF ERENCE TO CERTAIN MODES OF ACQUISITION. THE COST OF ACQUISITION OF THE ASSET W HEN THE PROVISION OF SEC. 49 ARE APPLICABLE IS DEEMED TO BE THE COST AT WHICH THE PR EVIOUS OWNER OF THE ASSET ACQUIRED IT AS INCREASED BY THE COST OF ANY IMPROVEMENT. SEC . 55(2) OF THE L. T. ACT LAYS DOWN THE MEANING TO BE ASCRIBED TO THE PHRASE COST OF ACQU ISITION IN RELATION TO A CAPITAL ASSET FOR THE PURPOSE OF SEC. 49 IN THE CIRCUMSTANCES THE REIN SAID OUT.CAPITAL GAIN TAX IS LEVIED ON THE PROFIT OR GAIN THAT ARISES ON THE TRA NSFER OF A CAPITAL ASSET. ORDINARILY IT IS THE ACTUAL COST OF ACQUISITION THAT HAS TO BE TA KEN INTO ACCOUNT. IT IS ONLY IN THE SPECIFIC CASE THAT SEC. 49 OF THE L. T. ACT PROVID ES SUCH COST IS DEEMED TO BE THE COST AT WHICH THE PREVIOUS OWNER ACQUIRED IT. THE LEGAL FIC TION CREATED BY SEC. 49 APPLIES ONLY TO THE SITUATION SAID OUT THEREIN. COST INFLATION INDEX IS THE YARDSTICK TO MERGE THE INFLATION DURING THE PERIOD OF HOLDING OF ASSETS TO COUNTERVAIL THE EFFECT OF INFLATION IN COMPUTING THE REAL LONG TERM CAPITAL GAINS. AS SUCH PERIOD OF HOLDING OF THE ASSET AND ACCUMULATED COST INFLATION INDEX EFFECT ARE IN HERENTLY DOVETAILED IN COMPUTATION OF INDEX COST OF ACQUISITION DEDUCTABLE OUT OF SALE PROCEEDS TO COMPUTE THE REAL RATIONAL LONG TERM CAPITAL GAINS CHARGEABLE TO TAX. THE SPECIAL BENCH 1TAT MUMBAI IN THEIR JUDGMENT IN THE CASE OF MANJULA J S HAH HAVE ELABORATELY CONSIDERED THE PREVIOUS OF SEC 48 SEC 49 CIRCULAR NO636 AND V ARIOUS OTHER JUDGMENTS AND HAVE NOT CONFINED TO SEC 2(42A) EXPLANATION-1(B). AS SEE N FROM THE DETAILS FURNISHED BY THE APPELLANT REGARDING SANJOY BANERJEE ASSESSMENT WA S COMPLETED BY ITO WARD-30(3) AND THE INCOME WAS COMPUTED AS NIL BY DISALLOWING THE CAPITAL LOSS. THE APPELLANT PURCHASED THE PROPERTY FROM SANJOY BANERJEE WHO INH ERITED THE PROPERTY FROM HIS FATHER. IN THE ABOVE MENTIONED CIRCUMSTANCES THE AC TION OF THE A.O. IN CALCULATING THE INDEXED COST OF ACQUISITION BY APPLYING COST INFLAT ION INDEX FOR THE FINANCIAL YEAR 2005-06 IS NOT FAIR IN THIS CASE UNDER APPEAL THE INDEX COST OF ACQUISITION HAS TO BE 3 ITA 1740/K/2010 SMT. SHASHI MARODIA A.Y.07-08 COMPUTED BY APPLYING THE COST OF INFLATION INDEX FO R THE FINANCIAL YEAR 1981-82 IN COMPUTING THE LONG TERM CAPITAL GAIN. LN VIEW OF THE ABOVE FACTS THERE WAS NO NECESSITY FOR THE APPELLANT TO WITH HOLD TAX AS PER PROVISIONS OF SEC. 195 OF THE I. T. ACT. THE A .O. IS DIRECTED TO DELETE THE ADDITION MADE U/S.201(1)& 201(1A). WE FIND THAT NO REASON TO INTERFERE IN THE ORDER OF CIT(A) AS THE ASSESSEES FATHER SHRI MANOJ KANTI BANERJEE GOT THIS PROPERTY FROM HIS MOTHER I N 1970 AND IN TURN HIS SON SHRI SANJOY BANERJEE GOT THE PROPERTY IN SUCCESSION AFTER THE E XPIRY OF MANOJ KANTI BANERJEE ON 18.2.2006. IN VIEW OF THE PROVISIONS OF SECTION 49 OF THE ACT IT IS CLEAR THAT THE PROPERTY RELATES BACK TO 1970 AND COST OF ACQUISITION I.E. THE FAIR MARKET V ALUE AS ON 1.4.1981 IS TO BE ADOPTED AND THEREBY COST INFLATION INDEX IS TO BE APPLIED ACCOR DINGLY. IN THIS PREMISE WE DISMISS THE APPEAL OF THE REVENUE. 4. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. 5. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . . ! ' '' ' # # # # ! (S. V. MEHROTRA (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED 28TH JULY 2011 '01 %23 4' JD.(SR.P.S.) . 5 6 76'8- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ITO (INTERNATIONAL TAXATION)-2(1) KOLK ATA. 2 -*+ / RESPONDENT SMT. SHASHI MARODIA P-56 CIT ROAD SCHEME-IV(M) BELIAGHATA KOLKATA-700 010. 3 . .% ( )/ THE CIT(A) KOLKATA 4. .% / CIT KOLKATA 5 . '> % / DR KOLKATA BENCHES KOLKATA -6 / TRUE COPY .%?/ BY ORDER #3 /ASSTT. REGISTRAR .