INDIRA SIVAPRASAD,CHENNAI vs. ITO, CHENNAI

Shri Vepa Krishna, the Ld. representative for the assessee submitted that the assessees are members of the joint family and received the subject property on a partition which took place on 01.05.2012 and accordingly adapted the indexed cost of asset as on 01.04.1981. Placing reliance on the judgment of the Bombay High Court in CIT v Manjula J Shah (2013) 355 ITR 472, the Ld. representative submitted that even though the assessee inherited the property and obtained a specific share on a partition which took place on 01.05.2012, it cannot be said that the assessee has acquired the property. The property was received by the assessee only because of inheritance from the parents. Therefore, the cost of indexation has to be adopted from the year in which the assessees father acquired the property. Therefpre the CIT (Appeals) is not justified in confirming the order of the Assessing Officer.

On the contrary, Shri V. Nanda Kumar, the Ld. Departmental Representative submitted that the assessees have became the owner of the property on 01.05.2012, when the partition took place by means of a settlement deed. Therefore, the Assessing Officer and the CIT (Appeals) have rightly found that cost inflation index has to be adopted from the financial year 2012-13.

We have considered the rival submissions on either side and perused the material available on record. An identical issue was considered by the Bombay High Court in the case of Manjula J Shah (supra). The Bombay High Court found that when the property was inherited, the cost of indexation has to be adopted from the year in which the previous owner acquired the property. Inheritance of property and the allotment of specific share on a partition by means of family settlement cannot be construed as a transfer of property. Hence, the Assessing Officer is not justified in holding that the assessee acquired the property only on 01.05.2012, when the specific share of the property was allotted to the assessee. By respectfully following the judgment of the Bombay High Court in the case of Manjula J Shah (supra), this Tribunal is of the considered opinion that the indexed cost of acquisition has to be adopted from the year in which the previous owner acquired the property. Therefore, we are unable to uphold the orders of both the authorities below. Accordingly, the orders of both the authorities below are set aside and the Assessing Officer is directed to adopt the cost inflation index from the year in which the previous owner acquired the property.

In the result both the appeals of the assessees stands allowed.