SHEELA BHAGWANDAS NICHLANI,MUMBAI vs. ACIT 12(3), MUMBAI

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ITA 1477/MUM/2015Status: DisposedITAT Mumbai27 October 2016AY 2010-113 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal followed a previous order on an identical issue involving the assessee's husband. It held that the word 'held' in Explanation (iii) to section 48 does not necessitate physical ownership or possession, and indexation should be allowed from the date the rights in the property were held.

What were the facts?

The assessee claimed indexation benefit on an intangible asset, which was denied by the CIT(A) on the grounds that the asset was intangible. The assessee argued that the benefit of indexation should be available to any long-term capital asset, regardless of its tangibility.

What were the issues?

Whether the benefit of indexation is available for intangible assets. Interpretation of 'held' in Explanation (iii) to Section 48 regarding intangible assets.

Which sections of the Income-tax Act were involved?

Section 48

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI D. KARUNAKARA RAO & SHRI AMARJIT SINGH

For Appellant: Shri K.R. Lakshminarayana
For Respondent: Shri A.K. Kardam, DR
Hearing: 27.10.2016Pronounced: 27.10.2016

सुनवाई की तायीख / Date of Hearing : 27.10.2016 घोषणा की तायीख /Date of Pronouncement : 27.10.2016 आदेश / O R D E R

PER D. KARUNAKARA RAO, AM:

1.

This appeal filed by the assessee on 11.3.2005 is against the order of the CIT (A)-28, Mumbai dated 28.01.2015 for the assessment year 2010-2011. In this appeal, assessee raised the following grounds which read as under:- “1. The order passed by the CIT (A) is bad in law.

2. Whereas the CIT (A) had readily accepted the fact that the appellant‟s right to obtain conveyance in respect of a property is a long term asset, CIT (A) erred in denying the benefit of indexation (which is automatically available to any long term capital asset) only on the ground that the said asset is an intangible asset.

3. The Ld CIT (A) is in error in wrongly stating that „clause (iii) of Explanation to section 48 is applicable to a physical and tangible asset which is physically held by the assessee‟ when the said clause (ii) to Explanation to section 48 nowhere restrict the applicability to tangible asset only.”

At the outset, Ld Counsel for the assessee briefly narrated the facts of the 2. case and mentioned that the only issue involved in this appeal relates to the denial of benefit of indexation on the ground that the said asset is intangible asset by wrongly interpreting clause (iii) of Explanation to section 48 of the Act. In this regard, Ld Counsel for the assessee brought our attention to the order of the Tribunal, wherein the assessee is the husband of the present assessee, in (AY 2010-2011), dated 16.8.2016 and mentioned that an identical issue was adjudicated by the Tribunal and the appeal was allowed for statistical purposes. It is the prayer of the Ld Counsel for the assessee that considering the commonality of the issue involved, the present appeal may be decided in tune with the cited order of the Tribunal (supra).

3.

On hearing both the parties and on perusal of the orders of the Revenue Authorities as well as the cited decision of the Tribunal (supra), we find, the identical issue was adjudicated by the Tribunal (supra) vide paras 2.1 to 2.4 of its order dated 16.8.2016. For the sake of completeness of this order, relevant lines from the said para 2.4 on page 6 of the Tribunal‟s order are extracted as under:- “2.4.......the assets which are referred under the capital gains include not only the property which are tangible but also intangible rights, whose physical possession cannot be taken. The word “held” used in Explanation (iii) to section 48 does not mean physical ownership or physical possession of the property. The assessee was holding the rights in the property from 27/12/1990, therefore, it was held that indexation has to be allowed from that date. Thus, in the light of the foregoing discussion / judicial pronouncements, the Ld Assessing Officer is directed accordingly and decide afresh in accordance with law. Needless to mention here that the assessee be given opportunity of being heard. Thus, the appeal of the assessee is allowed for statistical purposes only.” Considering the above and respectfully following the above decision of the 4. Tribunal as well as following the principles of consistency, we direct the AO to decide the issue afresh in the light of the precedents on the identical issue and in accordance with law after examining the claim of the assessee. Accordingly, grounds raised

by the assessee are allowed for statistical purposes.

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