SUMAN KHURANA,MUMBAI vs. ASST CIT CEN CIR 20, MUMBAI

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ITA 1132/MUM/2015Status: DisposedITAT Mumbai05 May 2017AY 2010-115 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the AO had not properly applied its mind to the issue of indexation from the date of allotment. Therefore, the revisional order under Section 263 was justified. However, the Tribunal directed that the period of holding should be computed from the date of allotment as per settled law.

What were the facts?

The assessee claimed indexation benefit on the sale of a flat from the date of allotment. The CIT invoked revisional powers under Section 263, holding the assessment order erroneous and prejudicial to revenue as the AO allegedly did not apply its mind to the issue.

What were the issues?

Whether the CIT was justified in invoking Section 263 when the AO had accepted the assessee's claim on capital gains indexation? Whether indexation benefit on a flat can be claimed from the date of allotment?

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 54EC

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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

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

Per Manoj Kumar Aggarwal (Accountant Member)

1.

The captioned appeal by assessee for Assessment Year [AY] 2010-11 assails the exercise of revisional jurisdiction u/s 263 by Ld. Commissioner of Income tax (Central)-2 [CIT] vide order dated 30/01/2015.

2.

Briefly stated, the assessee, being resident individual assessee, was assessed for impugned AY u/s 143(3) where the returned income of Rs.56,06,930/- e-filed by assessee on 28/09/2010 was accepted as such. The assessee was engaged in the business of trading in shares. Subsequently, the assessment was subjected to revisional jurisdiction u/s 263 vide CIT order dated 30/01/2015 wherein the Ld. CIT observed that the assessee has availed indexation benefit on sale of a flat from the date of its allotment, whereas, the same, in the opinion of Ld. CIT, was available only from the date of possession of the flat and therefore, the quantum order being erroneous and prejudicial to the interest of revenue was set aside. Aggrieved, the assessee has, by way of this appeal, assailed the jurisdiction acquired by the Ld. CIT u/s 263. 3. The Ld. Counsel for assessee [AR] drew our attention to the factual matrix of the case by contending that the assesse sold the flat during impugned AY on 30/10/2009 for Rs.40 Lacs. The said flat was acquired by the assessee from the builder at total price of Rs.7.76 Lacs by way of allotment letter dated 07/12/1993 and therefore, the assessee was entitled for indexation benefit qua cost of acquisition from Financial Year Suman Khurana Assessment Year 2010-11 1993-94 itself as per various settled judicial pronouncements particularly by recent judgment of Mumbai Tribunal in Anita D.Kanjani Vs. ACIT [79 taxmann.com 67 order dated 13/02/2017]. Further, the assessee filed complete details regarding capital gains during proceedings u/s 143(3) and the Ld. AO duly applied her mind on the issue and accepted the claim of the assessee. Therefore, since AO has taken a plausible view, the order cannot be held to be erroneous and therefore, invocation of Section 263 was not justified. 4. Per Contra, Ld. Departmental representative contended that the AO, during assessment proceedings, failed to make any inquiry on the issue raised by the Ld. CIT and therefore, the power was correctly exercised as the order was erroneous and prejudicial to the interest of the revenue. 5. We have heard the rival contentions and perused relevant material on records. So far as the merits of the case are concerned, we find that the present appeal by assessee questions the exercise of revisional jurisdiction u/s 263 by Ld. CIT and not the merits of the case. The limited issue to be decided by us is that whether the Ld. CIT, on the facts, was justified in invoking Section 263 or not? A perusal of the AO’s order u/s 143(3) reveals that this issue is nowhere discussed by the AO in her order. We find that certain details regarding working of capital gains were provided by assessee in computation of income by mentioning date of sale / date of purchase and other factual data. Further, a letter dated 01/01/2013 apparently submitted by assessee during quantum proceedings contains similar details wherein copies of sale agreement and proof of bond investment u/s 54EC were submitted and nothing ITA No.1132/M/2015 Suman Khurana Assessment Year 2010-11 more. The assessee has placed on record an allotment letter dated issued by the builder on 07/12/1993 regarding which, prima facie was never before Ld. AO. Also, the details of payment made by assessee qua the acquisition of flat were nowhere given. All these factors lead us to conclude that there was no application of mind on the issue by AO. The assessee has raised another plea that the capital gains has been invested in bonds eligible for Section 54EC deduction and therefore, the order was not prejudicial to the interest of the revenue in any manner. However, we find no strength in the argument as assessee has invested only the amount of capital gains and not the entire sale proceeds and therefore, the same do not help assessee in any way.

6.

Therefore, on the facts and circumstances of the case, we find that twin conditions of Section 263 viz. order being erroneous and prejudicial to the interest of the revenue were fulfilled. Further, quantum order has been passed on 24/01/2013 whereas order u/s 263 is passed on 30/01/2015 which is within the statutory time limit. Therefore, we see no reason to interfere with the Section 263 order of Ld. CIT at this stage and therefore, dismiss assessee’s appeal.

7.

However, it is noted that the assessee has placed before us allotment letter dated 07/12/1993 issued by the builder and therefore, we hold that the period of holding shall be computed from the date of allotment as per the ratio of cited order of the Tribunal. The assessee shall be entitled for indexation benefit year-wise qua cost of acquisition as per the actual payment made by him from time to time. With these observations, the assessee is free to substantiate his claim on merits Suman Khurana Assessment Year 2010-11 during the relevant proceedings and AO is at liberty to decide the issue as per law on merits.

8.

The assessee’s appeal stands dismissed in terms of our above order.

Order pronounced in the open court on 05th May, 2017.

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