ITO 22(2)(5), MUMBAI vs. PONAM KAMAL GABA, MUMBAI

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ITA 4554/MUM/2015Status: DisposedITAT Mumbai20 July 2016AY 2011-123 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that indexation should be allowed from the date the previous owner acquired the property, following the jurisdictional High Court's decision. The pending appeal by the Revenue before the Supreme Court did not override the binding High Court precedent.

What were the facts?

The assessee inherited property and claimed indexation for capital gains. The Revenue disputed the period for indexation, arguing it should start from the assessee's acquisition date, not the previous owner's.

What were the issues?

The key issue was whether indexation for capital gains on inherited property should be calculated from the date of the previous owner's acquisition or the assessee's acquisition.

Which sections of the Income-tax Act were involved?

Section 48

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI

Before: SHRI D. KARUNAKARA RAO & SHRI SANJAY GARG

For Appellant: Shri S.L. Jain, A.R
For Respondent: Shri K. Ravi Kiran, D.R
Hearing: 18.07.2016Pronounced: 20.07.2016

Per Sanjay Garg, Judicial Member:

1.

The present appeal has been preferred by the Revenue against the order dated 13.05.2015 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2011-12.

2.

The Revenue has taken the following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in granting relief to the assessee ignoring the fact that as per Explanation (iii) to Section 48 of the I.T.Act,1961 indexation is allowable to the assessee from the date on which the assessee became the owner of the property for the first year in which the asset was held by the assessee.

2. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in granting relief to the assessee based on the judgement of the Hon'ble Bombay High Court in the case of CIT Vs. Manjula J. Shah (2012) 249 CTR (Bom) 270 ignoring the fact that the said decision has not been accepted by the Revenue and appeal has been preferred against the said order before the Hon'ble Supreme Court in Civil appeal

3. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the AO be restored.

4. The appellant craves Leave to amend or alter any ground or add a new ground which may be necessary.”

3.

The assessee in this case had inherited some property. The issue before us is as to whether the claim of indexation is to be allowed from the date on which the previous owner acquired the property, from whom the assessee had inherited the property in question or from the date on which the assessee himself actually acquired the property. We find that the Ld. CIT(A) has allowed the relief to the assessee on the above issue following the decision of the Hon’ble Bombay High Court in “CIT vs. Manjula J. Shah” (supra) wherein it has been held that while computing the capital gains on transfer of a capital asset acquired by the assessee under a gift, the indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee became the owner of the asset. The Ld. CIT(A) has also relied upon another decision of the Hon’ble Bombay High Court in the case of “CIT vs. M/s. Janhavi S. Desai” (2012) 252 CTR 518 (Bom.) wherein similar view has been expressed.

4.

So far as the contention that the Department has filed an appeal against the decision of the Hon’ble Bombay High Court is concerned, we find that as on today the issue is squarely covered by the decision of the jurisdictional High Court which is binding on this Tribunal. Hence, respectfully following the said decision, we do not find any infirmity in the order of the Ld. CIT(A) in relying upon the decision of the Hon’ble Bombay High Court while deciding the issue in favour of the assessee.

5.

In view of this, there is no merit in the appeal of the Revenue and the Order pronounced in the open court on 20.07.2016.

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