ASIISTANT COMMISSIONER OF INCOME TAX NON CORPORATE CIRCLE 6(1), CHENNAI vs. SHRI. RANGROOPMAL CHORDIA, CHENNAI

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ITA 403/CHNY/2018Status: DisposedITAT Chennai04 December 2020AY 2013-144 pages
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What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal as the tax effect was below the monetary limit. The Tribunal partly allowed the assessee's cross-objection by directing the Assessing Officer to allow 50% of the claimed cost of improvement.

What were the facts?

The Revenue appealed against the CIT(A)'s direction to grant indexation benefit from 01.04.1981. The assessee argued the tax effect was below the monetary limit for appeals. The assessee also filed a cross-objection regarding the denial of cost of improvement.

What were the issues?

Whether the Revenue's appeal is maintainable due to low tax effect and whether the cost of improvement should be allowed as a deduction.

Which sections of the Income-tax Act were involved?

Section 68

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Before: Shri Duvvuru RL Reddy & Shri G. Manjunatha

Hearing: 14.10.2020Pronounced: 04.12.2020

Heard together (2 matters)

I.T.A. No. 403/Chny/2018
C.O. No. 119/Chny/2018

Read from the judgment's own cause title. This page is filed under one of them.

O R D E R PER BENCH: The appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 5, Chennai, dated 24.11.2017 relevant to the assessment year 2013-14. The only effective ground raised in the appeal of the Revenue is that the ld. CIT(A) has erred in directing the Assessing Officer to give the benefit of indexation from 01.04.1981.

2.

At the time of hearing, the ld. Counsel for the assessee has submitted that the tax effect in the appeal filed by the Revenue is less than the monetary limit of ₹.50,00,000/- fixed by the CBDT to file an appeal by the Revenue before the Tribunal as per the CBDT Circular No. 17/2019, dated 08.08.2019. The ld. DR fairly conceded the submissions made by the ld. Counsel for the assessee. Being so, the Revenue authorities are precluded from filing the appeal before the Tribunal, since the tax effect is less than ₹.50,00,000/- in this appeal and the appeal filed by the Revenue is liable to be dismissed.

3.

Otherwise also, while computing the indexed cost of acquisition, in relation to an asset which has been acquired through inheritance and which was acquired prior to 1981-82, indexation has to be with reference to the year 1981-82 and cost of acquisition to be adopted would be as on 01.04.1981 as has been held by the Hon’ble Bombay High Court in the case of CIT v. Manjula J. Shah 355 ITR 474 (Bom), which was further concurred by the Hon’ble Delhi High Court in the case of Arun Shungloo Trust [2012] 205 TAXMAN 456 (Delhi). In view of the above, the appeal filed by the Revenue stands dismissed.

1.

The Cross Objection filed by the assessee is delayed by 83 days, 4. for which, the ld. Counsel for the assessee has filed a petition in support of an affidavit for condonation of the delay along with medical certificate, to which; the ld. DR has not raised any serious objection. Consequently, since the assessee was prevented by sufficient cause, the delay of 83 days in filing of the CO stands condoned and the CO is admitted for adjudication.

4.1 The assessee preferred Cross Objection against the order of the ld. CIT(A) in confirming the denial of the claim of deduction with respect to the cost of improvement at ₹.4,45,811/-. The Assessing Officer rejected the claim of the assessee for the deduction of cost of improvement during 1985- 86 to the extent of ₹.4,45,811/- as the assessee did not furnish any proof for having incurred such expenditure. On appeal, the ld. CIT(A) confirmed the disallowance of deduction claimed by the assessee.

4.2 We have considered the rival contentions, perused the materials available on record and gone through the orders of authorities below. The contention of the ld. Counsel for the assessee is that the Assessing Officer has accepted the cost of the building based on the valuer’s certificate, but, rejected the entire claim of cost of improvement. On perusal of the assessment order, we find that the Assessing Officer has accepted the valuer’s certificate/report for assessing cost of building for the purpose of computation of capital gain, whereas, for the purpose of cost of improvement, the Assessing Officer rejected the valuer’s certificate/report is found to be incorrect. Admittedly, the assessee’s mother raised 2nd and 3rd floor even though purchase bills, vouchers are not brought on record since the cost of improvement took place 30 years back and cost of improvement cannot be ruled out since super structure of the building was not in dispute. Under these facts and circumstances, we set aside the orders of authorities below on this issue and direct the Assessing Officer to allow 50% of the claim as cost of improvement claimed by the assessee. Thus, the ground raised by the assessee in the CO is partly allowed.

5.

In the result, the appeal of the Revenue is dismissed and the CO filed by the assessee is partly allowed. Order pronounced on the 04th December, 2020 in Chennai.

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