GEORGE DUMING ANDRET, MUMBAI v. ITO WD 4(1), MUMBAI

ITA 2070/MUM/2010 | 2005-2006
Pronouncement Date: 06-01-2011 | Result: Allowed

Appeal Details

RSA Number 207019914 RSA 2010
Assessee PAN AGBPA4394G
Bench Mumbai
Appeal Number ITA 2070/MUM/2010
Duration Of Justice 9 month(s) 21 day(s)
Appellant GEORGE DUMING ANDRET, MUMBAI
Respondent ITO WD 4(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 06-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 06-01-2011
Date Of Final Hearing 06-01-2011
Next Hearing Date 06-01-2011
Assessment Year 2005-2006
Appeal Filed On 15-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G MUMBAI. BEFORE SHRI PRAMOD KUMAR ACCOUNTANT MEMBER AND SHRI V. DURGA RAO JUDICIAL MEMBER ITA NO.2070/MUM/2010 (ASSESSMENT YEAR : 2005-06) GEORGE DUMING ANDRET BAHSHIS KAULAR BADDRUK DHOKSHET WADI VASAI (W) DIST. THANE- 401201. PAN AGBPA4394G VS. INCOME TAX OFFICER WARD 4(1) THANE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHOD L RATNAPARKHI. RESPONDENT BY : SHRI PAVAN VED. PER V. DURGA RAO : THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORD ER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II TH ANE DT.27.112009. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN I NDIVIDUAL FILED RETURN OF INCOME DECLARING INCOME OF RS.3 36 430. THE ASSESS EE HAS SOLD A PIECE OF LAND BEARING S.NOS.44 45 46 94 AND 96 ADMEASURIN G 68 091 SQ. YDS FOR RS.1 44 05 000 TO M/S. LAND MARK DEVELOPERS. THE S AID LAND WAS INHERITED BY THE ASSESSEE FROM HER MOTHER SMT. ISPUBAI WHO DI ED ON 9.1.1994. THE ASSESSEE WHILE COMPUTING THE CAPITAL GAINS FOR THE YEAR UNDER CONSIDERATION HAS TAKEN THE FAIR MARKET VALUE OF INHERITED PROPER TY AS ON 1.4.1981 OF RS.14 LAKHS. THE ASSESSEE HAS TAKEN THE INDEXATION FOR THE YEAR 1981 AND HAS ACCORDINGLY WORKED OUT INDEXATION COST OF ACQUISITI ON AS RS.67 20 000. HOWEVER THE ASSESSING OFFICER HAS NOT ACCEPTED THE INDEXED COST AS WORKED OUT BY THE ASSESSEE ON THE GROUND THAT SINCE THE AS SESSEE BECAME THE OWNER OF THE SAID LAND DURING THE F.Y. 1994-95 THE YEAR OF INDEX FOR COST OF ITA NO.2070/MUM/2010 2 ACQUISITION SHOULD HAVE BEEN ADOPTED AS 1994-95 INS TEAD OF 1980-81. ON BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER BEF ORE THE CIT(A). THE STAND TAKEN BY THE ASSESSEE BEFORE THE CIT(A) THAT AS THE PROPERTY WAS INHERITED AND AGREEMENT OF SALE WAS ENTERED INTO BY HIS MOTHER SMT. ISPUBAI THE ASSESSEE HAS EXECUTED THE CONVEYANCE D EED THE CORRECT DATE IS TO BE TAKEN AS 1.4.1981 AND NOT 1994-95. THE LEARNE D CIT(A) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE HE LD AS UNDER : LOOKING AT THE FACTS OF THE CASE AT HAND IT IS C LEAR THAT THE APPELLANT BECAME THE OWNER OF THE ASSET FOR THE FIR ST TIME AFTER THE DEATH OF HIS MOTHER SMT. ISPUBAI ANDRET ON 9.1. 1994 AS HER LEGAL HEIR. THE MOTHER OF THE APPELLANT HAD EARLIE R ENTERED INTO AN AGREEMENT FOR THE SALE OF PLOT OF LAND BEARING S URVEY NO.46(2) AND 96 FOR RS.80 00 000 WITH M/S. TUNGARESHWAR LAND DEVELOPERS VIDE AGREEMENT DATED 15.9.1988 AND RECEIVED ONLY PA RT PAYMENT OF RS.47 00 000. BUT THIS AGREEMENT WAS NEVER CARR IED OUT IN FULL AND REMAINED UNEXECUTED TILL HER DEATH. THEREAFTE R ANOTHER FRESH AND FINAL AGREEMENT WAS SIGNED BY THE APPELLA NT WITH M/S. LAND MARK DEVELOPERS ON 5.5.2004 FOR TOTAL CONSIDER ATION OF RS.1 44 05 000. THIS AGREEMENT WAS EXECUTED AND CO MPLETED BY THE APPELLANT ONLY AFTER HE BECAME THE OWNER OF THE PROPERTY IN QUESTION AND THE OWNERSHIP WAS VESTED IN HIM IN THE YEAR 1994- 95 BY VIRTUE OF BEING THE LEGAL HEIR. THE PROPERTY WAS HELD AS INDEPENDENT OWNER BY THE APPELLANT FOR THE FIRST TI ME DURING THE FINANCIAL YEAR 1994-95. THE FACT WHICH EMERGES FRO M THE CIRCUMSTANCES ABOVE EXPLAINED THEREFORE IS THAT THE APPELLANT GOT THE RIGHT TO EXECUTE THE AGREEMENT WITH M/S. LAND M ARK DEVELOPERS IN 2004 ONLY AFTER ACQUIRING THE PROPERT Y FROM HIS MOTHER IN THE YEAR 1994-95. SO THE YEAR IN WHICH T HE APPELLANT HELD THE ASSET FOR THE FIRST TIME WAS UNDISPUTEDLY 1994-95 WHEN IT WAS TRANSFERRED TO HIM AS A LEGAL HEIR. NOW AGAIN THE EXPLANATION TO SECTION 48 OF INCOME TAX ACT WHICH R EADS INDEXED COST OF ACQUISITION MEANS AN AMOUNT WHICH BEARS TO THE COST OF ACQUISITION THE SAME PROPORTION AS COST INFLATION I NDEX FOR THE YEAR IN WHICH THE ASSET IS TRANSFERRED BEARS TO THE COST INFLATION INDEX FOR THE FIRST YEAR IN WHICH THE ASSET WAS HEL D BY THE ASSESSEE OR FOR THE YEAR BEGINNING ON THE 1 ST DAY OF APRIL 1981 WHICHEVER IS LATER WHEN APPLIED TO THE CASE OF TH E APPELLANT THE POSITION BECOMES CLEAR. THE LATER PERIOD HERE IS T HE YEAR 1994-95 WHEN THE PROPERTY WAS HELD AS INDEPENDENT OWNER BY THE APPELLANT FOR THE FIRST TIME. THE PREVIOUS OWNER O F THE LAND IN QUESTION SMT. ISPUBAI ANDRET HELD THIS PROPERTY AS INDEPENDENT ITA NO.2070/MUM/2010 3 OWNER FOR THE FIRST TIME AFTER THE DEATH OF HER HUS BAND SHRI DRUMING MANU ANDRET (ORIGINAL OWNER) ON 25 TH DECEMBER 1986. SO EVEN IF THE COST OF ACQUISITION IS DETERMINED IN THE HAND OF THE PREVIOUS OWNER IT CANNOT BE THE 1 ST APRIL 1981 BECAUSE THE PREVIOUS OWNER ALSO ACQUIRED IT MUCH AFTER 1981. T HE AGREEMENT FOR THE SALE OF THE LAND WAS ENTERED INTO AND EXECU TED BY THE PRESENT OWNER OF THE PROPERTY I.E. THE APPELLANT (E ARLIER AGREEMENT WITH SMT. ISPUBAI ANDRET COULD NOT BE EXE CUTED) THE COST OF ACQUISITION WOULD NATURALLY BE WHEN THE APP ELLANT BECAME THE OWNER OF THE PROPERTY AND HELD IT FOR THE FIRST TIME I.E. 1994- 95. ONCE THE YEAR IS DETERMINED IN WHICH THE APPELL ANT BECAME THE OWNER OF THE ASSET FOR THE FIRST TIME WHICH IS OBV IOUSLY 1994-95 THE ANSWER TO THE OTHER QUESTIONS OUTLINED ABOVE AR E SIMPLE I.E. THE COST INFLATION INDEX FOR THE YEAR 1994 WAS 244 AND OBVIOUSLY THE YEAR WAS LATER TO 1 ST APRIL 1981. IN VIEW OF THE ABOVE IN MY OPINION THE AO HAS CORRECTLY APPLIED THE LAW AND T HERE IS INFIRMITY IN THIS ORDER. THE FACTS OF THE CASE OF SMT. PUSHPA SOFAT VS. ITO (2002) 81 ITD 1 (CHD) RELIED ON BY THE APPELLANT ARE NOT SIMI LAR TO THE FACTS OF THE PRESENT CASE. IN THE CASE OF SMT. PUSHPA SO FAT VS. ITO THE COST OF ACQUISITION TO THE PREVIOUS OWNER WAS TAKEN AS ON 1 ST APRIL 1981 AS THE PREVIOUS OWNER ACQUIRED THE PROPERTY IN THE YEAR 1972 WHICH WAS MUCH BEFORE THE 1981. BUT IN THE CA SE OF THE APPELLANT EVEN THE PREVIOUS OWNER ACQUIRED THE PROP ERTY IN THE YEAR DECEMBER 1986 WHICH MUCH LATER TO 1981. SO TH E FACTS OF THE ABOVE CASE ARE NOT SIMILAR. THE FACTS OF THE O THER CASE OF DCIT VS. SMT. MEERA KHERA (2004) 2 SOT 902 (MUMBAI) RELIED ON BY THE APPELLANT ARE ALSO DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. IN VIEW OF THE FACTS AND CIRCUMSTANCES MENTI ONED ABOVE IN MY CONSIDERED OPINION THERE IS NO INFIRMITY IN THE ACTION OF AO REGARDING APPLYING COST INFLATION INDEX OF THE YEAR 1994 WHILE WORKING OUT THE LONG TERM CAPITAL GAINS ON THE SALE OF PROPERTY BY THE APPELLANT. THE ADDITION MADE AS A RESULT OF RECOMPUTING THE CAPITAL GAIN IS CONFIRMED. ON BEING AGGRIEVED BY THE ORDER OF CIT(A) THE ASSE SSEE CARRIED THE MATTER BEFORE THE TRIBUNAL. 3. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED B Y THE DECISION OF SPECIAL ITA NO.2070/MUM/2010 4 BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. MANJU LA J SHAH (2009) 126 TTJ (MUM) 145 (SB). 4. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE HAS NOT RAISED ANY OBJECTION WITH REGARD TO SUBMISSIONS MAD E BY THE LEARNED COUNSEL FOR THE ASSESSEE. NO MATERIAL HAS BEEN BROUGHT TO OUR NOTICE TO SHOW THAT THE SAID ORDER OF THE SPECIAL BENCH (SUPRA) HAS BEE N MODIFIED OR AVERSED BY HON'BLE HIGH COURT. THE LEARNED DEPARTMENTAL REPRESE NTATIVE COULD NOT POINT OUT ANY CONTRARY DECISION. 5. WE HAVE HEARD BOTH THE SIDES PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE SPECIAL B ENCH OF THE TRIBUNAL IN THE CASE OF MANJULA J SHAH (SUPRA) HAS HELD THAT IN OUR OPINION IT IS AN APPROPRIATE SITUATION TO ASSIGN A SCHEMATIC INTERPR ETATION TO SAID EXPLANATION GOING BY THE DESIGN OR PURPOSE WHICH LIES BEHIND IT SO AS TO PRODUCE THE DESIRED EFFECT WHICH WAS SOUGHT TO BE ACHIEVED. IF IT IS SO DONE THE ONLY VIEW POSSIBLE FROM THE INTERPRETATION OF RELEVANT P ROVISIONS IS THAT THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE PREVIOUS OWNER IS TO BE INCLUDED IN DETERMINING THE PERIOD FOR WHICH THE ASSET WAS HELD BY THE ASSESSEE AS PROVIDED IN EXPLN.1(B) TO S. 2(42A) AND THIS POSITI ON IS APPLICABLE EVEN FOR WORKING OUT THE INDEXED COST OF ACQUISITION WITHIN THE MEANING OF EXPLN.(III) TO S. 48. RESPECTFULLY FOLLOWING THE ABOVE SPECIA L BENCH DECISION (SUPRA) WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. IN S O FAR AS FOR THE INDEXATION COST THE DATE TAKEN BY THE ASSESSEE AS 1.4.1981 FO R INDEXATION COST THE ASSESSEE HAS OPTED THE OPTION AVAILABLE FOR HIM UND ER SECTION 55 CLAUSE (B) ITA NO.2070/MUM/2010 5 OF SUB-CLAUSE 2(II) OF THE ACT. IN VIEW OF THE ABO VE THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 6TH JAN. 2011. SD/- SD/- (PRAMOD KUMAR) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DT.6 TH JAN. 2011. *GPR COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT MUMBAI (4) CIT(A) MUMBAI (5) DR (6) GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES ITA NO.2070/MUM/2010 6 DATE INIT IALS 1. DRAFT DICTATED ON 6.1.2011. 2. DRAFT PLACED BEFORE AUTHOR 3. DRAFT PROPOSED & PLACED BEFORE SECOND MEMBER 4. DRAFT DISCUSSED & APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER.