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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI D.S. SUNDER SINGH
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -5, Chennai, dated 21.04.2016 and pertains to assessment year 2005-06.
There was a delay of 4 days in filing this appeal by the assessee. The assessee has filed a petition for condonation of delay. We have heard the Ld. representative for the assessee and the Ld. D.R. We find that there was sufficient cause for not filing the appeal before the stipulated time. Therefore, we condone the delay and admit the appeal.
The only issue arises for consideration is computation of capital gain.
Smt. S. Jayashree, the Ld. representative for the assessee, submitted that the assessee sold a property during the year under consideration for a consideration of `20,00,000/-. The Assessing Officer has taken the date of acquisition as the date on which the assessee got the possession of the property. According to the Ld. representative, the property was inherited, therefore, the cost of original acquisition by the previous owner has to be taken into consideration. This claim of the assessee was rejected by the Assessing Officer. The CIT(Appeals) also confirmed the order of the Assessing Officer. Referring to the judgment of Bombay High Court in CIT v. Manjula J. Shah (2013) 355 ITR 474, the Ld. representative submitted that the cost of acquisition of previous owner from whom the property was inherited, has to be taken for the purpose of capital gain.
On the contrary, Shri Shiva Srinivas, the Ld. Departmental Representative, submitted that the asset was inherited by the assessee only in the year 2002, therefore, the year in which the property was inherited by the assessee has to be taken into consideration for the purpose of indexation.
We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee inherited the property on death of the previous owner.
The question arises for consideration is for the purpose of cost of indexation, whether the year in which the property was inherited by the assessee has to be taken or the date on which the previous owner acquired the property has to be taken? This issue was examined by the Bombay High Court in Manjula J. Shah (supra).
The Bombay High Court found that indexation has to be made from the date on which the original asset was acquired by the previous owner. In view of the above, this Tribunal is of the considered opinion that both the authorities below are not justified in taking the date of inheritance of property for the purpose of indexation.
Accordingly, the orders of the authorities below are set aside and the Assessing Officer is directed to take the cost of the asset acquired by the previous owner and thereafter determine the capital gain as held by Bombay High Court in Manjula J. Shah (supra).
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 30th November, 2016 at Chennai.