VIVEK SYAL,CHENNAI vs. ITO, CHENNAI

ITA 3032/CHNY/2016Status: DisposedITAT Chennai21 February 2017AY 2012-134 pages

AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that for the purpose of indexation in cases of inheritance, the cost of acquisition of the original owner must be considered. The second issue regarding the sale deeds was remitted back to the AO for fresh consideration.

What were the facts?

The assessee inherited an immovable asset and claimed indexation benefit from the financial year 1981-82, considering the acquisition cost of the previous owner. The Assessing Officer (AO) adopted the date of the settlement deed for indexation. The assessee also argued that two sale deeds were merely to reaffirm possession and not a transfer triggering short-term capital gain.

What were the issues?

Whether the benefit of indexation for inherited property should be calculated from the original owner's acquisition date. Whether sale deeds reaffirming possession constitute a transfer triggering capital gains.

Which sections of the Income-tax Act were involved?

Not explicitly mentioned in the provided text, but the context relates to capital gains and indexation.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ ‘B’ BENCH, CHENNAI

Before: Shri A. Mohan Alankamony

Hearing: 21.02.2017

आदेश / O R D E R

This appeal by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals)-16, Chennai dated 23.08.2016 in and it pertains to assessment year 2012-13.

The assessee has raised several grounds in his appeal; however the Ld. AR submitted before us that only two issues survive for adjudication and they are briefly stated as follows:-

The Ld. CIT(A) has erroneously upheld the order of the Ld. AO

who had failed to adopt the cost of acquisition of the previous owner from whom the assessee had inherited the immovable asset for the purpose of indexation while computing the long term capital gain of the assessee.

2. The Ld. CIT(A) has erroneously upheld the order of the Ld. AO

who had failed to take note of the fact that the execution of the two sale deeds were merely to reaffirm the possession of the property and therefore it cannot be considered as transfer of property triggering short term capital gain.

At the outset, the Ld. AR submitted that the Ld. AO had adopted the date of settlement deed viz., 27.02.2009 as the date of acquisition of the asset, thereby computed indexation from the financial year 2008-09, though the property was purchased by the settler the grandmother of the assessee, before the financial year 1981-82. The Ld. AR further argued stating that the benefit of indexation has to be provided from the financial year 1981-82 by virtue of the various decisions such as :-

i. ACIT vs. Vijay Kamlakar Wagh (ITA No.5616/MUM/2010, ITAT Mumbai) ii. DCIT vs. Jyotiben Rohitbhai Gandhi (ITA No.2369/Ahd/2012, ITAT Ahmedabad) iii. Arun Shungloo Trust vs. CIT (ITA No.116/2011, Delhi High Court)

The Ld. A.R further pointed out that the above decisions were consistently followed by the Chennai Bench of the Tribunal. It was therefore pleaded that in the case of the assessee also, the Revenue may be directed to give the benefit of indexation to the assessee from the financial year 1981-82.

The Ld. DR though argued in favour of the orders of the Revenue could not controvert to his submissions.

After hearing both sides, I find merit in the submission of the Ld. AR. As pointed out by the Ld. AR, on various occasions Chennai bench of the Tribunal has followed the decision cited supra and held that for the purpose of indexation in the case of inheritance the cost of acquisition of the original owner has to be taken in to consideration, for instance the same ratio was followed in the case Mr. V.P. Anandan V/s., Income Tax Officer, “A” Bench of the Chennai Bench for the assessment year 2012-13 vide order dated 19/09/16. These facts are not in dispute. Therefore, I hereby direct the Ld. AO to give the benefit of indexation to the assessee from the financial year 1981-82. Accordingly, the first ground raised by the assessee is decided in his favour.

With respect to the second ground, both the parties agreed that the matter may be remitted back to the file of the Ld. AO for fresh consideration. Accordingly, the ground No.2 is remitted back to the file of the Ld. AO for de-nova consideration

In the result appeal of the assessee is partly allowed for statistical purposes.

Order pronounced on the 21st February, 2017.

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