ITO, CHENNAI vs. NALINI MAHADEVAN KUMARAN, CHENNAI

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ITA 1421/CHNY/2017Status: DisposedITAT Chennai23 August 2017AY 2013-145 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 for computing capital gains, the indexed cost of acquisition should be calculated with reference to the year the original owner acquired the property, not the year of inheritance.

What were the facts?

The assessees inherited property from their parents. The Assessing Officer computed the indexed cost of acquisition from the year of inheritance, while the assessees argued it should be from the year the original owner acquired the property.

What were the issues?

The key issue was whether the indexed cost of acquisition for inherited property should be based on the year of inheritance or the year of original acquisition by the parent.

Which sections of the Income-tax Act were involved?

Not explicitly mentioned, but relates to capital gains computation.

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, ‘C’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN

For Respondent: Shri S. Raghunathan, CA
Hearing: 17.08.2017Pronounced: 23.08.2017

Heard together (3 matters)

ITA No.1421/Mds/2017
ITA No.1424/Mds/2017
I.T.A. No.1425/Mds/17

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

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

All the three appeals of the independent assessees are directed against the respective orders of the Commissioner of Income Tax (Appeals) -16, Chennai. Since common issue arises for consideration in all the three appeals, we heard these three appeals together and disposing of the same by this common order.

2.

The only issue arises for consideration is computation of capital gain.

3.

Shri N. Madhavan, the Ld. Departmental Representative, submitted that all the three assessees inherited property from the respective parents. The Assessing Officer for the purpose of capital gain, computed the index cost of acquisition from the year in which the respective assessee inherited the property. According to the Ld. D.R., under the provisions of Income-tax Act, index cost of acquisition has to be computed from the year in which the assessee became the owner.

4.

On the contrary, the Ld. representatives for the assessees, submitted that the CIT(Appeals) by placing reliance on the judgment of Bombay High Court in CIT v. Manjula J. Shah (2013) 355 ITR 474 held that for the purpose of computing capital gain, index cost of acquisition has to be computed with reference to original owner who acquired the property and not the legal heir who inherited the property. According to the Ld. representatives, the property was first held by respective parents on acquisition. On their death, the assessee inherited the property by operation of law. Therefore, according to the Ld. representatives, by rightly placing reliance on the judgment of Bombay High Court and other decisions of the Tribunal, the CIT(Appeals) directed the Assessing Officer to compute the index cost of acquisition from the year in which the original owner acquired the property.

5.

We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that all the three assessees inherited the property from their respective parents by operation of law. The question arises for consideration is when the property was inherited by respective persons from the parents by operation of law, whether the index cost of acquisition has to be computed in the year in which they inherited the property or the year in which the original owner held the property. This issue was decided by Bombay High Court in Manjula J. Shah (supra). The Bombay High Court categorically held that the year in which the original owner acquired the property has to be taken for index cost of acquisition. In fact, the CIT(Appeals) has placed his reliance on this judgment of Bombay High Court.

Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

6.

In the result, all the three appeals filed by the Revenue are dismissed.

Order pronounced on 23rd August, 2017 at Chennai.

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