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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: SHRI S. RIFAUR RAHMAN (AM) & SHRI RAM LAL NEGI (JM)
O R D E R
PER RAM LAL NEGI, JM
1. This appeal has been filed by the assessee against the order dated 02.05.2017 passed by the Commissioner of Income Tax (Appeals)-28 (for short ‘the CIT(A), Mumbai, for the assessment year 2012-13, whereby the Ld. CIT(A) has dismissed the appeal filed by the assessee against the assessment order passed u/s 143 (3) of the Income Tax Act, 1961 (for short the ‘Act’).
Brief facts of the case are that the assessee engaged in the business of advancing loan to private parties and having income from capital gain and other sources, filed its return of income declaring the total income at Rs. 16,84,030/-. The case was selected for scrutiny. In response to the notice u/s 143 (2) and 142 (1) of the Act, the authorized representative (AR) appeared before the AO and filed the details and discuss the case. It was noticed that assessee had shown long term capital loss of Rs. 75,904/- on sale of flat at Borivali after claiming indexation of cost of acquisition and carried forward the Assessment Year: 2012-13 loss to the subsequent year. The assessee had purchase the flat for Rs. 63,12,600/-. The assessee had booked the flat vide letter dated 17.11.2006 and sold the same during the FY 2011-12 for a total consideration of Rs. 99,00,000/-. The AO denied the indexation claimed by the assessee. In the first appeal, the Ld. CIT (A) confirmed the action of the AO. Aggrieved by the impugned order passed by the Ld. CIT (A), the assessee is in appeal before the Tribunal. 2. The assessee has challenged the impugned order passed by the Ld. CIT (A) on the following effective grounds:-
“The order passed by the learned CIT (A) is bad in law.
2. The learned CIT (A) erred in not allowing benefit of indexation to the allotment letter dated 17/11/2006 even while accepting that it is a long term asset.
3. The learned CIT (A) erred in holding that CIT Vs. Tata Service
(1980) 122 ITR 594 Bombay allows right to acquire a property as capital asset and does not allow indexation without appreciating the fact that the judgment was rendered in 1980 whereas indexation was introduced from 1992. 4. It is prayed that the benefit of indexation may be allowed in respect of allotment letter.”
At the outset, the Ld. counsel for the assessee submitted that the ITAT has dealt with the identical issue in assessee’s own case pertaining to the AY 2010-11 and the ITAT vide order dated 16.08.2016 set aside the impugned order passed by the Ld. CIT (A) and directed the AO to decide the issue afresh in accordance with law after observing that since the assessee was holding the rights in the property, the assessee is entitled for indexation. The Ld. counsel further relied on the decision of the ITAT, Mumbai in the case of Ms. Nita A. Patel vs. ITO, ITA No. 4313/Mum of 2008 and Anita D Kanjani vs. ACIT, ITA No. 2291/Mum/2015 and the judgment of the Hon’ble Bombay High Court in the case of CIT vs. Assessment Year: 2012-13 Manjula J Shah 16 taxmann.com 42 (Bom) to substantiate the claim of the assessee.
On the other hand, the Ld. Departmental Representative (DR) supporting the order passed by the Ld.CIT (A) submitted that since the Ld. CIT (A) has passed the order in the light of the decision of the Tribunal in the assessee’s own case for the AY 2010-11, there is no infirmity in the order passed by the Ld. CIT (A). Moreover, the Ld. CIT (A) has distinguished the facts of the present case with the facts of the assessee’s case for the AY 2010-11. 5. We have heard the rival submissions and perused the material on record in the light of the rival contentions of the parties. The only grievance of the assesse is that the Ld. CIT (A) has erred in not allowing benefit of indexation even while accepting the same as long term asset. As per the Ld. counsel, the assessee acquired rights in the property vide letter of allotment dated 17.11.2006 and sold the rights in the said property through a registered sale deed vide agreement dated 30.03.2012 without taking possession of the property. The authorities below rejected the contention of the assessee on the ground that since the assessee had not taken possession of the said property, benefit of indexation of cost of acquisition cannot be given. As pointed out by the Ld. counsel, during the assessment year 2010-11 similar issue came before the coordinate Bench. In the said case, the assessee booked a flat in 2005 and made payments on various dates up to 2008 amounting to Rs. 43,67,370/-. Later on the assessee sold the flat allotted to it and received the consideration along with the compensation of Rs. 37,17,670/- as full and final consideration. The assessee claimed benefit indexation on the amount as cost of acquisition. The claim of the assessee was denied by the authorities below. The matter travelled to the ITAT and the ITAT set aside the order passed by the Ld. CIT (A) and directed the AO to decide the issue afresh in accordance with law holding that the assessee is entitled for indexation benefit. The operative part of the order of the coordinate Bench reads as under:- Assessment Year: 2012-13
2.4 If sub-clause (iii) to explanation to section 48 of the Act, which deals with mode of computation, is analyzed, the indexed cost of acquisition means the amount which bears to the cost of acquisition, the same proportion as cost inflation index for the year in which the asset is transferred bears to the cost inflation index for the year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later. In the present set of facts, the first amount was made by the assessee on 29.10.2005 and thereafter on various dates up to 09/08/2008. The assessee was holding the rights in the property from the date of agreement or at least w.e.f. 29/10/2005 when the first payment was made by the assessee. Neither the agreement was not made available before me nor this matter was analyzed from this angle. The ld. counsel contended that he is ready to produce the agreement before the Assessing Officer, thus, considering the totality of facts and the decision of the Tribunal in the case of Ms. Nita A. Patel vs Income Tax Officer (2011) 128 ITD 24 (supra), this appeal is remanded back to the file of the Assessing Officer to examine the claim of the assessee and if the assessee produces the agreement then the indexation may be granted from the date of agreement and if not, then from 29/10/2005, the date when the first payment of Rs.5 lakh was made by the assessee towards the purchase of the flat. The ratio laid down in CIT vs Ved Prakash & Sons (HUF) 207 ITR 148 (P & H) (Para-3), CIT vs R.R. Sood (1986) 161 ITR 92; 24 taxman 498 (Bom.)(para-3), CIT vs Poddar Cement Pvt. Ltd. (1997) (226 ITR 625 (SC)(para-9) and CIT vs Ms. Piroja C. Patel (2000) 242 ITR 582(Bom.)(Para-3) supports the case of the assessee. In the case of Ms. Nita A. Patel, it was held that the assets which are referred under the capital gains include not only the property which are tangible but also intangible rights, whose physical possession cannot be taken. The word “held used in explanation (iii) to section 48 does not mean physical ownership or physical possession of the property. The assessee was holding the rights in the property from 27/12/1990, therefore, it was held that indexation has to be allowed from that date. Thus, in the light of the foregoing discussion/judicial pronouncements, the ld. Assessing Officer is directed accordingly and decide afresh in accordance with law. Assessment Year: 2012-13 Needless to mention here that the assessee be given opportunity of being heard. Thus, the appeal of the assessee is allowed for statistical purposes only.”