ACIT, CHENNAI v. Shri P.Vikram, CHENNAI

ITA 1973/CHNY/2010 | 2006-2007
Pronouncement Date: 31-01-2011 | Result: Dismissed

Appeal Details

RSA Number 197321714 RSA 2010
Assessee PAN ADFPV8412F
Bench Chennai
Appeal Number ITA 1973/CHNY/2010
Duration Of Justice 2 month(s) 11 day(s)
Appellant ACIT, CHENNAI
Respondent Shri P.Vikram, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 31-01-2011
Assessment Year 2006-2007
Appeal Filed On 19-11-2010
Judgment Text
1 IN THE INCOMETAX APPELLATE TRIBUNAL:D- BENCH:CHENNA I (BEFORE SHRI ABRAHAM P. GEORGE. ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER) ITA NO. 1973/ MDS/10 ASST. YEAR 2006-07 THE ACIT VS. SHRI P. VIKRAM BUSINESS CIR.LL 16 CHEVALIAR SIVAJI GANESN RD. CHENNAI T.NAGAR CHENNAL 600017 PAN ADFPV8412F (APPELLANT) (RESPONDENT) APPELLANT BY SHRI.K.E.B. RENGARAJAN JR.STANDING CO UNSEL RESPONDENT BY: SHRI B. RAMAKRISHNAN ORDER PER SHRI ABRAHAM P.GEORGE A.M IN THIS APPEAL OF THE REVENUE ITS GRIEVANCE IS THA T CIT(A) DIRECTED THE AO TO ADOPT 1981-82 AS THE BASE FOR COMPUTING LONG TERM C APITAL GAINS OF THE ASSESSEE. ACCORDING TO THE REVENUE VIDE SEC. 48(III) OF THE INCOME TAX ACT 1961 (THE ACT FOR SHORT) THE COST INDEX HAD TO BE APPLIED VIS--VIS THE YEAR IN WHICH THE ASSESSEE BECAME THE OWNER 2 ITA NO/1973/MDS/10 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD DURING TH E RELEVANT PREVIOUS YEAR SOLD LAND MEASURING 383833 S.FT. IN S URVEY NO. 55 57 AND 58 IN MOUNT POONAMALLEE ROAD MANAPAKKANI CHENNAI TO M/S DLF INFOCITY DEVELOPERS (CHENNAI) LTD. FOR A CONSIDERATION OF 27 40 40 76O/- BY DOCUMENT DATED 11-04-2005. THE PROPERTY WAS HELD BY THE ASSESSEE ALONGWITH HIS COUSIN BROTHER ONE SHRI R G DUSHYANTH ASSESSEE WORKED OUT 50%OF CAPITAL GAINS ON ACCOUNT OF THE ABOVE SAF E AND THE GAIN WAS COMPUTED CONSIDERING THE MARKET VALUE OF 1981 IND EXED AS THE BASE. THE ABOVE PROPERTY WAS BEQUEATHED TO THE ASSESSEE BY HI S GRAND FATHER LATE . SHRI V C GANESAN BY A WILL DATED 23 06 1999 IT PASS ED ON TO THE ASSESSEE ON 2 1-07-2001 ON THE DEATH OF HIS GRAND F ATHER. AS PER THE ASSESSEE COST OF ACQUISITION OF THE PROPERTY HAD T O BE CONSIDERED AS THE COST AT WHICH HIS GRAND FATHER SHRI V.C. GANESAN HA D ACQUIRED IT OR THE ESTIMATED VALUE OF THE PROPERTY AS -ON 01-04-1981 WHICHEVER WAS LATER. SHRI V.C. GANESAN HAD ACQUIRED THE PROPERTY ON 31-0 7-1961 AND THEREFORE THE COST OF THE PROPERTY FOR WORKING OUT THE CAPITAL GAINS WAS TAKEN BY THE ASSESS AS THE VALUE ON 01-04-1981 AND INDEXED CONSIDERING T HE COST INDEX OF 100. APPLYING THE DE EMING PROVISION OF SEC. 49 OF THE ACT ASSESSEE WAS OF THE OPINION THAT THIS METHODOLOGY WAS APPROPRIATE. THE CAPITAL GAINS WORKED OUT BY ASSESS EE AND REFLECTED IN HIS RETURN WAS BASED ON THE ABOVE METHODOLOGY VIZ TAKI NG THE COST AS ON 01- 04-1 981 AND INDEXING IT VIS-A-VIS THE INDEX OF 198 1-82. 3 ITA NO. 1973/MDS/1O 3. HOWEVER AO DID NOT APPROVE THIS WORK OUT BY THE AS SESSEE. ACCORDING TO THE AO PROPERTY DEVOLVED ON THE ASSESS EE IN FINANCIAL YEAR 2001-02 AND THEREFORE THE BASE INDEX THAT HAS TO B E APPLIED WAS 426 RELEVANT FOR FINANCIAL YEAR 2001-02. HE THEREFORE MADE A RE-WORK OF LONG TERM CAPITAL GAINS THEREBY INCREASING IT TO ` 9 99 64 67O/- AGAINST A SUM OF ` 8 05 555 576/- ADMITTED BY THE ASSESSEE. 4. IN HIS APPEAL BEFORE THE CIT(A) SUBMISSION OF THE A SSESSEE IN VIEW OF SEC.49 OF THE ACT HE WAS JUSTIFIED IN C ONSIDERING THE COST INDEX AS ON 01-04-1981 FOR THE PURPOSE OF INDEXATION. CIT (A) WAS APPRECIATIVE OF THIS CONTENTION. HE AMONG OTHERS RELYING ON THE D ECISIONS OF THE SPECIAL BENCH IN THE CASE OF DCIT VS. V. MANJULA J. SHAH (2 010) 35 SOT 105 HELD THAT ASSESSEE WAS JUSTIFIED IN INDEXING THE COST ST ARTING FROM THE COST INDEX RELEVANT FOR FINANCIAL YEAR 1981-82. HE THEREFORE DELETED THE ADDITION MADE BY THE AO. 5. NOW BEFORE US ID. DR STRONGLY ASSAILING THE ORDER OF THE CIT(A) OPINED THAT IN VIEW OF THE CLEAR WORDING IN SEC.48( III) OF THE ACT COST INDEX RATE RELEVANT FOR THE YEAR IN WHICH THE PROPERTY W AS ACQUIRED BY THE ASSESSEE ALONE COULD BE CONSIDERED. 6. PER CONTRA ID. AR STRONGLY SUPPORTED THE ORDER OF THE CIT(A). 4 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBM ISSIONS. FACTS ARE NOT IN DISPUTE. ASSESSEE HAD RECEIVED PROPERT Y BY A WILL. THE WILL WAS EXECUTED BY HIS GRAND FATHER WHO EXPIRED ON 21-7- 2001. TITLE TO THE PROPERTY WAS RECEIVED BY ASSESSEE ON 21-107-2001. G RAND FATHER HAD ACQIORED THE PROPERTY AS EARLY AS ON 31-07-1961/ T HE QUESTION IS WHETHER ASSESSEE COULD TAKE THE VALUE OF THE PROPERTY AS ON 01-04-1981 ANS INDEX IT FROM THE COST INDEX FOR 1981-82. IT HAS BEEN CLE ARLY ANSWERED BY SPECIAL BENCH IN THE CASE OF V. MANJULA J.SHAH (SUPRA) REL IED ON BY THE LD. CIT(A) RELEVANT PARA OF THE ORDER OF THE SPECIAL BENCH IS REPRODUCED HEREUNDER: WE ARE OF THE VIEW THAT FOR THE PURPOSE OF COMPUT ING LONG TERM CAPITAL GAINS ARISING FROM THE TRANSFER OF A CAPIT AL ASSET WHICH HAD BECOME THE PROPERTY OF THE ASSESSEE UNDER GIFT TH E FIRFST YEAR IN WHICH THE CAPITAL ASSET WAS HELD BY THE ASSESSEE H AS TO BE DETERMINED TO WORK OUT THE INDEXED COST OF ACQUISI TION AS ENVISAGED IN EXPLANATION (III) TO SEC.48 AFTER TAKING INTO A CCOUNT THE PERIOD FOR WHICH THE SAID CAPITAL ASSET WAS ;HELD BY THE PREVCIOUS OWNER. IN VIEW OPF THE MATTER WE HOLD THAT THE INDEXED COST OF ACQUISITION OF SUCH CAPITAL ASSET HAS TO BE COMPUTED WITH REFEREN CE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET. THE FACTS IN THE CASE OF THE APPELLANT ARE IDENTICAL TO THOSE PREVAILING IN THE CASE ABOVE CITED AND HENCE THE AR SUBMITTED THAT THE ABOVE MEN TIONED DECISION SQUARELY APPLIED TO THE CASE OF THE APPELL ANT AND IS FAVOURABLE TO HIM. THE ABOVE DECISION HAVING BEEN D ELIVERED BY A SPECIAL BENCH OF THE INCOME-TAX APPELLAT E TRIBUNAL WILL BE BINDING ON THE OTHER DIVISION BENCHES OF THE INCOME-TAX APPELLATE TRIBNUNAL AND THE OTHER APPELLATE AUTHORITIES SUBORDINATE TO THE INCOME-TAX APPELLATE TRIBUNAL. 5 8. WE ARE OF THE OPINION THAT UNLESS THE REVENUE CAN P RODUCE ANY DECISION OF A HIGHER AUTHORITY WHICH WOULD WARRANT TAKING A DIFFERENT VIEW ID. CIT(A) CANNOT BE FAULTED IN FOLLOWING THE DECIS ION OF SPECIAL BENCH IN V.MANJULA J.SHAH (SUPRA). FACTS OF THE SAID CASE CL EARLY APPLY HERE. WE ARE OF THE OPINION THAT CIT(A) WAS JUSTIFIED IN DIR ECTING THE AO TO COMPUTE THE CAPITAL GAINS CONSIDERING 1981-82 AS THE BASE Y EAR AND CONSIDERING THE COST INDEX FOR THAT YEAR 1981-82 FOR THE RELEVA NT WORK-OUT. NO INTERFERENCE IS CALLED FOR. J 9. IN THE RESULT APPEAL OF THE REVENUE STANDS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON -01-2011 SD/- SD/- (GEORGE MATHAN) (ABRAHAM P.GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI: 31 ST JANUARY 2011. NBR CC ASSESSEE/ ASSESSING OFFICER/ CIT(A)/ CITI/D.R/ G UARD FILE