ASST CIT 24(3), MUMBAI vs. SRIDHAR VELLALA, MUMBAI

In this appeal, Revenue has raised the following Grounds of appeal:-

At the time of hearing, it was noted that none appeared on behalf of the assessee nor has any application for adjournment placed before us inspite of notice of hearing being served upon the assessee. Therefore, we proceed to dispose-off the appeal ex-parte qua the respondent assessee after hearing the Ld. Departmental Representative on merits in terms of Rule -25 of Income Tax (Appellate Tribunal) Rules, 1963.

The relevant facts are that the assessee is an individual, who inherited a property to the extent of 1/5th from his parents and vide a settlement agreement dated 31/05/2011 with his four sisters, the remaining 4/5th share of the property also came to the assessee. The property was sold during the year for a total consideration of Rs.2,68,00,000/- and accordingly, the assessee returned the long term capital gain at Rs.2,57,36,750/-. The Assessing Officer computed the capital gain at Rs.3,35,80,000/-. The difference between the Assessing Officer and the assessee was in relation to the benefit of indexation available on the cost of acquisition. Notably, the assessee considered the cost of acquisition and indexation factor as on 01/04/1981 since the property was acquired by his father in 1974. The Assessing Officer adopted the fair market value as on 01/04/1981 as the cost of acquisition but differed with the assessee on the allowability of indexation benefit. The Assessing Officer granted the benefit of indexation from the year 2011, when assessee actually acquired the property in his name. The CIT(A) has upheld the stand of the assessee by following the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Manjula J. Shah, 355 ITR 474 (Bom). Against such a decision, Revenue is in appeal before the Tribunal.

From the orders of authorities below, it is quite clear that assessee acquired the rights in the property on inheritance and settlement with the other family members and, hence, the period of holding of the previous holders is to be included while allowing the benefit of indexation. Therefore, in our view, the CIT(A) made no mistake in applying the ratio of the judgment of the Hon'ble Bombay High Court in the case of Manjula J. Shah(supra) and allowing the indexation benefit w.e.f. 01/04/1981. Even in the Grounds of appeal raised, the Revenue does not dispute the fact that the issue is covered by the judgment of the Hon'ble Bombay High Court in the case of Manjula J. Shah(supra),but the only point raised is that an SLP has been filed by the Department against the decision of the Hon'ble Bombay High Court in the Hon’ble Supreme Court. Be that as it may, the judgment of the Hon'ble Bombay High Court in the case of Manjula J.

In the result, appeal of the Revenue is dismissed.