ITO (IT) 3(1), MUMBAI v. RAJA KOTAK, MUMBAI

ITA 2964/MUM/2010 | 2007-2008
Pronouncement Date: 30-03-2011 | Result: Dismissed

Appeal Details

RSA Number 296419914 RSA 2010
Assessee PAN AQTPK8829J
Bench Mumbai
Appeal Number ITA 2964/MUM/2010
Duration Of Justice 11 month(s) 15 day(s)
Appellant ITO (IT) 3(1), MUMBAI
Respondent RAJA KOTAK, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 30-03-2011
Assessment Year 2007-2008
Appeal Filed On 15-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH MUMBAI BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 2964/MUM/2010 (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER (IT) 3(1) SHRI RAJU KOTAK ROOM NO. 114 SCINDIA HOUSE 2ND FLOOR KOTAK KUNJ. 13/16 BALLARD PIER MUMBAI 400038 VS. KIDWAI NAGAR K.M. MUSHI MARG CHOWPATTY MUMBAI 400007 PAN - AQTPK 8829 J APPELLANT RESPONDENT APPELLANT BY: SHRI R.K. GUPTA RESPONDENT BY: SHRI S.S. PHADKAR O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) X MUMBAI DATED 25.01.2010. 2. REVENUE HAS RAISED THE FOLLOWING GROUND: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS EN TITLED TO THE BENEFITS OF INDEXED COST OF ACQUISITION WITH EFFECT FROM 01-04- 1981 WITHOUT APPRECIATING THAT CLAUSE (III) OF EXPL ANATION TO THE PROVISO TO SEC 48 OF I.T. ACT 1961 SPECIFICALLY ALL OWED INDEXATION FROM THE DATE OF HOLDING OF THE ASSET BY THE ASSESS EE AND ACCORDINGLY THE CIT(A) HAS ERRED IN DIRECTING THE A SSESSING OFFICER TO CONSIDER THE PERIOD OF HOLDING OF THE PR EVIOUS OWNER FOR THE PURPOSES OF COMPUTING INDEXED COST OF ACQUISITI ON. 3. BRIEFLY STATED THE A.O. NOTED THAT THE ASSESSEE AL ONG WITH CO-OWNERS HAVE SOLD HOUSE PROPERTY AT KOTAK KUNJ CHOWPATTY M UMBAI ON 08.04.2006 FOR A TOTAL CONSIDERATION OF ` 8 40 00 000/-. ASSESSEES SHARE IS 1/14 TH IN THAT PROPERTY AND HIS SHARE OF CONSIDERATION COMES TO ` 60 00 000/-. ASSESSEE FILED A COPY OF VALUATION REPORT IN RESPECT OF THE PROPERTY TO INDICATE HIS SHARE OF COST AS ON 01.04.1981 AT ` 6 27 143/-. AFTER TAKING THE BENEFIT OF INDEXATION COMPUTED THE INDEXED COST AT ` 32 54 872/- AND THE CAPITAL GAIN ITA NO. 2964/MUM/2010 SHRI RAJU KOTAK 2 WAS ARRIVED AT ` 27 45 128/-. THE A.O. NOTICED THAT THE PROPERTY WAS ACQUIRED BY WAY OF INHERITANCE ON 29.08.1993 AFTER THE DEATH OF HIS FATHER AND ASSESSEES FATHER HIMSELF HAS INHERITED FROM HI S FATHER ON 28.01.1978 WHO IN TURN INHERITED FROM HIS FATHER ON 18.01.1957 . THE A.O. ALLOWED INDEXATION BENEFIT W.E.F. 29.08.1993 I.E. THE DATE ON WHICH ASSESSEE INHERITED IT FROM HIS FATHER ON HIS DEATH. THE MATT ER WAS CONTESTED BEFORE THE CIT(A) WHO AFTER EXAMINING THE FACTS AND NOTICI NG THAT PROVISIONS OF SECTION 49(1)(III)(A) R.W. EXPLANATION WOULD APPLY TO THE ASSESSEE AND FOLLOWING THE BOARDS CIRCULAR NO. 636 DATED 31.08. 1992 AND ALSO FOLLOWING THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF DCIT VS. MANJULA J. SHAH 30 DTR (MUM) (SB) (TRIB) 601 DATED 16.10.2009 DIRECTED THE A.O. TO ADOPT THE COST OF INDEXATION AS ON 01.04.1981 AS TH E PREVIOUS OWNER HAS HELD THE PROPERTY PRIOR TO 01.04.1981. 4. AFTER HEARING THE ARGUMENTS OF THE RIVAL PARTIES AN D EXAMINING THE FACTS WE DO NOT SEE ANY REASON TO INTERFERE WITH TH E ORDER OF THE CIT(A). THE CIT(A) HAS CORRECTLY ALLOWED THE COST OF INDEXATION AS THE ASSESSEE HAS INHERITED THE PROPERTY FROM HIS FATHER WHO HIMSELF HAS INHERITED FROM HIS FATHER. THEREFORE IT SATISFIED THE CONDITIONS FOR ALLOWING THE BENEFIT OF INDEXATION FROM 01.04.1981. THE SPECIAL BENCH OF TH E ITAT CONSIDERED THE CASE OF RECEIPT OF PROPERTY THROUGH GIFT AND EXAMIN ED THIS ISSUE IN DETAIL AND HELD THAT THE BENEFIT OF INDEXATION HAS TO BE ALLOW ED FROM THE TIME THE PREVIOUS OWNER HELD THE PROPERTY OR FROM 01.04.1981 WHICH EVER IS APPLICABLE. IN THAT CASE IT WAS HELD AS UNDER: - CONCLUSION : FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL GA IN ARSING FROM THE TRANSFER OF A CAPITAL ASSET WHICH H AD BECOME PROPERTY OF THE ASSESSEE UNDER GIFT THE FIRST YEAR IN WHICH THE CAPITAL ASSET WAS HELD BY THE ASSESSEE HAS TO BE DETERMINED TO WO RK OUT THE INDEXED COST OF ACQUISITION AS ENVISAGED IN EXPLN. (III) TO S. 48 AFTER TAKING INTO ACCOUNT THE PERIOD FOR WHICH THE SAID C APITAL ASSET WAS HELD BY THE PREVIOUS OWNER I.E. INDEXED COST OF ACQ UISITION OF SUCH CAPITAL ASSET HAS TO BE COMPUTED WITH REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET. 5. RESPECTFULLY FOLLOWING THE PRINCIPLES ESTABLISHED B Y THE SPECIAL BENCH WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) WHO HIMSELF HAS ITA NO. 2964/MUM/2010 SHRI RAJU KOTAK 3 ANALYSED THE LEGAL PROVISIONS AND VARIOUS ORDERS OF THE ITAT INCLUDING THE ORDER OF THE SPECIAL BENCH. THEREFORE THE GROUND O F THE REVENUE IS REJECTED. 6. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH 2011. SD/- SD/- (N.V. VASUDEVAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 30 TH MARCH 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) X MUMBAI 4. THE CIT DIT (IT) MUMBAI CITY 5. THE DR D BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.