ITO (IT) 2(1)(1), MUMBAI vs. KERSHAW BURJOR COLABAWALLA, MUMBAI

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ITA 948/MUM/2017Status: DisposedITAT Mumbai04 July 2018AY 2012-134 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that indexation benefit for capital gains on assets acquired by inheritance should be computed with reference to the year the previous owner first held the asset, not the year of inheritance. This decision was based on a binding High Court judgment.

What were the facts?

The assessee inherited a residential flat acquired by the previous owner before April 1, 1981. The assessee claimed indexation benefit from FY 1981-82, while the AO allowed it only from FY 2002-03, the year of inheritance. The CIT(A) ruled in favor of the assessee.

What were the issues?

The key issue was whether indexation benefit for capital gains on inherited assets should be calculated from the year the previous owner acquired the asset or the year the assessee inherited it.

Which sections of the Income-tax Act were involved?

Section 48

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: SHRI JOGINDER SINGH, JM & SHRI MANOJ KUMAR AGGARWAL, AM

Per Manoj Kumar Aggarwal (Accountant Member)

1.

Aforesaid appeal by revenue for Assessment Year [AY] 2012-13 contest the order of the Ld. Commissioner of Income-Tax (Appeals)-57 [CIT(A)], Mumbai, Appeal No.CIT(A)-57/Arr.74/2016-17 dated 24/10/2016 by raising the following sole ground of appeal:- 1. “Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) has erred in holding that while computing the capital gains arising on transfer of capital asset acquired by the assessee under a gift, the indexed cost of acquisition Kershaw Burjor Colabawalla Assessment Year-2012-13 has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee became the owner of the asset?”

The assessment for impugned AY was framed by Ld. Income Tax Officer (International Taxation)-2(1)(1), Mumbai [AO] u/s 143(3) of the Income Tax Act,1961 on 17/03/2015 determining total income at Rs.115.61 Lacs. None has appeared for assessee since RPAD notice has returned back undelivered and updated address of the assessee is not available on record. Left with no option, we proceed to dispose-off the same on the basis of material available on record and after hearing Ld. Departmental Representative [DR], Sh. Rajat Mittal. The only dispute involved under the appeal is the year from which the indexation benefit shall be available to the assessee in case of inheritance while arriving at certain capital gains earned by the assessee during impugned AY.

2.

During assessment proceedings, it was noted that the assessee earned certain capital gains on sale of a residential flat, which devolved upon the assessee during Financial Year [FY] 2002-03 consequent to death of assessee’s father. The said flat was acquired by the original owner prior to 01/04/1981. Accordingly, the assessee claimed indexation benefit against the same from FY 1981-82. However, considering the provisions of section 48, Ld. AO opined that indexation benefit was available only since FY 2002-03, being the year in which the flat actually devolved upon the assessee. Resultantly, the indexation benefit was allowed only from FY 2002-03 which resulted into Long Term Capital Gains being computed at Rs.115.61 Lacs in the hands of the assessee.

3.

Aggrieved, the assessee contested the same with success before Ld. CIT(A) vide impugned order dated 24/10/2016 wherein Ld. CIT(A), Kershaw Burjor Colabawalla Assessment Year-2012-13 relying on the judgment of Hon’ble Bombay High Court rendered in Manjula V. Shah Vs DCIT [355 ITR 474] concurred with the stand of the assessee. Aggrieved, the revenue is in further appeal before us. The Ld. DR has supported the stand of Ld. AO.

4.

Upon due consideration, we find that the issue under hand, at present, stood squarely covered in assessee’s favour by the cited judgment of Hon’ble Bombay High Court. Although, it is observed that Special Leave Petition against the said judgment has been admitted by Hon’ble Apex Court Vide SLP No. 19924/2012, yet the operation of the judgment has not been stayed in any manner by the Hon’ble Apex Court and the ratio of the decision, at present, is binding on us. The revenue has neither disputed the basic factual matrix nor able to bring on record any contrary judgment to support the stand of Ld. AO. Therefore, concurring with the stand of Ld. CIT(A), we dismiss the revenue’s appeal.

5.

Resultantly, the revenue’s aappeal stands dismissed. Order pronounced in the open court on 04th July, 2018.

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