ITO (IT) 1(2)(1), MUMBAI vs. MANMOHAN SADANAND BHATKAL, MUMBAI

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ITA 5449/MUM/2016Status: DisposedITAT Mumbai30 January 2018AY 2013-144 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 the indexed cost of acquisition for inherited property should be computed with reference to the year the previous owner first held the asset, not the year the assessee became the owner. This decision was based on the Bombay High Court's ruling in CIT vs. Manjula J. Shah.

What were the facts?

The assessee sold an inherited property and calculated long-term capital gains using the acquisition year of the previous owner (prior to 1981). The Assessing Officer argued for using the year the assessee inherited the property (2011-12) for indexation.

What were the issues?

The primary issue was whether the indexation for capital gains on inherited property should start from the year of acquisition by the previous owner or the year of inheritance by the current assessee.

Which sections of the Income-tax Act were involved?

Section 48,Section 2(42A)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI

Before: SHRI G.S.PANNU & SHRI RAM LAL NEGI

For Appellant: Shri Manmohan S. Bhatkal(Assessee )
For Respondent: Shri Rajesh Kumar Yadav, Shri Manmohan S. Bhatkal(Assessee )
Hearing: 01/11/2017Pronounced: 30/01/2018

Heard together (3 matters)

C.O. NO.262/MUM/2017
ITA No. 5449/Mum/2016
CO 262/Mum/16

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

ORDER PER G.S.PANNU,A.M:

The captioned appeal by the Revenue and Cross-objection by the assessee are directed against the order of CIT(A)-55, Mumbai dated 26.04.2016, pertaining to Assessment Year 2013-14, which in turn has arisen from the order dated 31/03/2016 passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).

2.

In so far as the appeal of the Revenue is concerned, the Grounds of appeal read as under:-

1. "Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in holding that while computing the Capital Gain on the sale of inherited property, the indexed cost of acquisition 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?"

2. The Appellant prays that the order of the Ld. CIT (A) be set aside on the above grounds and that of the Assessing Officer be restored.

3. Briefly put, the relevant facts are that the assessee has sold a property i.e. Flat No.C-2, Anand Ashram, Vadilal Patel Marg, Grant Road, Mumbai 400047 for a consideration of Rs.3.00 crores and returned long term capital gain at Rs.2,12,02,674/-. The Assessing Officer noted that assessee had inherited the property on the death of his mother on 05/07/2011 and that the property was otherwise acquired by assessee’s grandmother prior to 1981. In CO 262/Mum/16 (Assessment Year 2013-14) 3 this background, assessee had worked out the long term capital gain by adopting the date of acquisition as 01/01/1981 and the indexed cost was calculated accordingly. The Assessing Officer differed with the assessee on the computation of capital gain, inasmuch as, accordingly to him the indexation was required to be taken from the financial year 2011-12 and not from 1981. Accordingly, the long term capital gain was worked out by the Assessing Officer at Rs.2,88,79,322/- as against Rs. Rs.2,12,02,674/- worked out by the assessee. The CIT(A) noted that the action of the Assessing Officer was contrary to the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Manjula J. Shah, 355 ITR 474 (Bom) and, therefore, he set-aside the action of the Assessing Officer and restored the determination of capital gains as done by the assessee. Against such a decision of the CIT(A) the Revenue is in appeal before us.

4.

Though the Ground of appeal canvassed by the Revenue is in support of the action of the Assessing Officer but there is no rebuttal to the fact that the issue in question continues to governed by the decision of the Hon'ble Bombay High Court in the case of Manjula J. Shah (supra),as it has not been altered by any higher authority. Therefore, under these circumstances, we do not find any reason to interfere with the decision of the CIT(A), which is hereby affirmed. Thus, the appeal of the Revenue is dismissed, as above.

5. In so far as, the cross-objection filed by the assessee is concerned, the same is merely in support of the decision of the CIT(A) and since we have already affirmed his decision while deciding the appeal of the Revenue, the cross objection is rendered infructuious.

CO 262/Mum/16 (Assessment Year 2013-14) 4

6.

In the result, appeal of the Revenue as well as cross-objection of the assessee are dismissed, as above.

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