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Income Tax Appellate Tribunal, DELHI BENCH “F” NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F” NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI C.M. GARG: JUDICIAL MEMBER Asstt. Yr: 2009-10 ACIT Circle 24(1), Vs. Rajiv Khosla, New Delhi. M-4, Greater Kailash-1, New Delhi. PAN: AAAPK 0821 B ( Appellant ) (Respondent) Appellant by : Ms. Rakhi Bimal Sr. DR Respondent by : None Date of hearing : 10/05/2016. Date of order : 12/05/2016. O R D E R PER S.V. MEHROTRA, A.M:
This is revenue’s appeal assailing the order dated 21.02.2013, passed by the ld. CIT(A)-XXIII, New Delhi in appeal no. 184/11-12, for A.Y. 2009-10.
None put in appearance on behalf of the assessee at the hearing. The registered envelope, containing the notice of hearing, has been returned unserved with the postal remark “left”. We proceed to dispose of the department’s appeal, ex parte, qua the assessee, on merits and in that process we have heard ld. DR and perused the record of the case.
Sole effective ground taken by the revenue is as under:
“On the facts and on the circumstances of the case, the ld. CIT(A) has erred in deleting the addition of Rs. 43,08,314/- made by the AO.”
Brief facts of the case are that the assessee, a partner of M/s Stalwart Industries, filed his return of income declaring income of Rs. 1,39,71,890/-. The AO noticed that during the year the assessee had sold property bearing no. M-4, Greater Kailash Part-1, owned with his wife for total consideration of Rs. 5,50,00,000/-. The assessee was owner of 50% share in the said property. Accordingly, he had shown long term capital gain of Rs. 1,38,26,545/- after claiming exemption of Rs. 84,06,355/- u/s 54 of the I.T. Act, being investment in residential property Royalton tower DLF city, Phase V, Gurgaon. The AO examined the computation of capital gain and noticed that assessee had taken fair market value of the said property at Rs. 17,10,000/- as on 1.4.1981 and share of the assessee being 50% of the aid was taken at Rs. 8,55,000/-. The AO further noticed that assessee had acquired the said property through Will and testament dated 5.7.2007 from his mother Smt. Urmila Khosla on her death on 13.12.2006. The AO pointed out that in such case the cost of acquisition would be the cost of acquisition to previous owner as per provisions of section 49(1) of the I.T. Act. Further, it was option for the assessee to take the value of the said property to the previous owner or fair market value as on 1.4.1981, which is beneficial to him. The AO pointed out that assessee had adopted the cost inflation index to compute the capital gain for FY 1981-82 whereas the property was inherited by him on the death of his mother i.e. on 13.12.2006 and transferred in his name on 5.7.2007. At this juncture we may clarify that the date of Will has wrongly been stated as 5.7.2007 because mother of assessee expired on 13.12.2006. However, nothing turns on this as far as the issue involved in the present appeal is concerned. The AO was of the opinion that since the assessee had first held the property on 13.12.2006, therefore, the index cost of acquisition should be computed by applying cost inflation index for FY 2006-07. The assessee in its reply pointed out that for the purpose of section 49(1), the period of holding the asset had to be determined by including the period for which the said asset was held by the previous owner and, therefore, for arriving at the indexation, the first year, in which the said asset was held by the previous owner, would be the first year in which the asset was held by the assessee. It was pointed out that since the previous owner held the capital asset from 1.4.1981, therefore, the assessee is deemed to have held the capital asset from 1.4.1981. The assessee relied on the decision of Hon’ble Mumbai High Court in the case of CIT Vs. Manjula J. Shah( Appeal no. 3378 of 2010). However, the AO did not accept the assessee’s contention and after analyzing section 49(1), section 2(42A)(b), section 49(1) and sec. 55(2)(b)(ii), concluded that intent of law is amply clear that the beneficiary owner should get the benefit of indexation from the date of acquisition of property and there is no scope for extension of indexation benefit to the beneficiary assessee who became the owner of capital asset through a mode mentioned in section 49(1) of the I.T. Act by including the period of holding of asset by previous owner. He, accordingly, computed the capital gain at Rs. 1,81,34,859/- by taking cost inflation index for FY 2006-07 at 590 and not of FY 1981-82 i.e. 100.
Ld. CIT(A) allowed the assessee’s appeal observing in para 4 as under:
“4. I have carefully considered the appellant's submissions and perused the cases laws relied on by the appellant. In respect of Ground of Appeal No.2 relating to the indexed cost of acquisition of the capital asset, the Assessing Officer has held that the appellant had become the owner of the property only on the death of his mother on 13.12.2006. While the Assessing Officer has allowed the market value as on 1.4.1981 to be the cost of acquisition of the property, however, he has allowed the indexation of the cost only from the year in which the appellant first became the owner of the property. I find that this issue stands fully covered by the order of the Bombay High Court in the case of Manjula J. Shah (supra). The Hon'ble High Court has referred to the provisions of Explanation l(b) to section 2(42A), Explanation (iii) to section 48, Section 49(1) and Section 55(2)(b)(ii) to hold that in cases of capital assets acquired through gift, inheritance, etc., for the purpose of computing long term capital gains, the first year in which the capital asset was held by the assessee has to be determined to work out the indexed cost of acquisition after taking into account the period for which the capital asset was held by the previous owner. Moreover, the issue is now covered by the judgment of the jurisdictional High court in the case of Arun Shungloo Trust Vs. CIT (2012) 249 CTR 294. Respectfully following the above judgments, it is held that the indexed cost of acquisition of the capital asset acquired by the appellant through inheritance has to be computed with reference to the year in which the previous owner first held the asset. Accordingly, Ground of Appeal No. 2 is held in favour of the appellant.”
6. As the issue is now squarely covered by the decision of Hon’ble Mumbai High Court in the case of Manjula J. Shah (supra) and the Hon’ble Jurisdictional High court in the case of Arun Shungloo Trust Vs. CIT (2012) 249 CTR 294, we do not find any reason to interfere with the order of ld. CIT(A) and, therefore, we concur with the finding of ld. CIT(A) that the index cost of acquisition of the capital asset acquired by the assessee through inheritance has to be computed with reference to the year in which the previous owner first held the property. Ground is dismissed.
In the result, revenue’s appeal is dismissed.
Order pronouncement in open court on 12/05/2016.