MADHUMAL ADIYARI SAJEEV,CHENNAI vs. ITO, CHENNAI

आदेश / O R D E R

‘’1.The Learned CIT(A) erred in dismissing the appeal by confirming taxable capital gain at Rs. 98,27,657/- (before

ITA No.02/Mds/2017 :- 2 -: claiming exemption uls 54 at Rs. 90,00,000/-) as against Rs. Nil Returned by Assessee Appellant.

2The CIT (A) erred in confirming indexed cost of acquisition at Rs. 72,443/- as against Rs. 31,40,000/- estimated by Assessee Appellant based on statutory provision and case law related thereto.

3The CIT (A) erred in confirming the Indexation benefit based on inheritance of property and date of settlement of the property on 12.5.2011 disregarding the statutory provision and case law furnished by Appellant.

4.The CIT (A) erred in rejecting the Fair Market Value estimated at Rs. 4 lakhs l/5th of Rs. 20 lakhs) by Assessee and confirming the FMV estimated at Rs. 61,600/- (l/5th of Rs.3,08,000/-).

5.The CIT (A) ought to have accepted that FMV is to be estimated as on per statutory provision.

6.The CIT (A) erred in wrongly understanding Explanation (iii) to section 48 and confirmed the working of capital gain by Assessing Officer.

7.For such other grounds that appellant may raise during the hearing of the appeal, the Hon'ble Tribunal may consider the issues raised in this appeal.

ITA No.02/Mds/2017 :- 3 -:

Ld. Departmental Representative submitted that assessee 3. having inherited one-fifth share in the subject property on the death of his father on 22.07.2009 and another 1/10th share subsequently, through a settlement deed executed by his mother on 12.05.2011, by virtue of judgment of Hon’ble Bombay High Court in the case of Manjula J. Shah Shah (supra), the claim of the assessee appeared to be fair.

I have considered the contentions and perused the orders of 4. the authorities below. Only issue argued by the ld. Authorised Representative is with regard to the year from which the indexation benefit had to be given while working out indexed cost, for computing the capital gains. It is not disputed that the property on which capital gains was computed, was acquired by the assessee’s parents on 15.12.1972. Assessee’s father had died on 22.07.2009 and being one of the legal heir, he had obtained 1/5th share in 50% of the property.

Thereafter through a settlement deed executed on by his mother on 12.05.2011, he got another 1/10th share. Assessee had claimed indexation taking the base year as 01.04.1981, considering the period of holding of the property by his parents, which was not accepted by the ld. Assessing Officer. Though the assessee relied on the judgment of Hon’ble Bombay High Court in the case of Manjula J.

Shah Shah (supra) before ld. Commissioner of Income Tax (Appeals),

ITA No.02/Mds/2017 :- 4 -: the ld. Commissioner of Income Tax (Appeals), refused to follow the said judgment. In my opinion by virtue of judgment of Hon’ble Bombay High Court in the case of Manjula J. Shah (supra) read alongwith clause (b) to Sec. 2(42A) of the Income Tax Act, 1961 (in short ‘’the Act’’) period of holding of the earlier owner of the property has also to be considered while computing the indexation, benefit in the case of a succession or inheritance or gift. I therefore direct the ld. Assessing Officer, to workout the indexed cost of acquisition of the subject property for computing the capital gains, considering 01.04.1981 as the base year.

In the result, appeal of the assessee is partly allowed. 5.