ITO (IT) 3(3)(1), MUMBAI vs. ANUJA K PARIKH, AHEMEDABAD

ITA 4768/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 on an inherited capital asset should be calculated from the year the previous owner acquired it, not the year the assessee inherited it. This followed the Bombay High Court's precedent.

What were the facts?

The assessee inherited a capital asset and claimed indexation on its cost of acquisition from the year the previous owner acquired it. The Revenue disputed this, arguing indexation should be from the assessee's acquisition year.

What were the issues?

The key issue was whether the indexation for capital gains on an inherited asset should be based on the year of the previous owner's acquisition or the assessee's acquisition.

Which sections of the Income-tax Act were involved?

Not explicitly mentioned in the provided text, but relates to capital gains computation.

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 Respondent: Shri K. Ravi Kiran, D.R

Hearing: 18.07.2016Pronounced: 20.07.2016

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the Revenue against the order dated 27.03.2015 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2011-12.

The Revenue has taken the following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) erred in allowing the indexation on the inherited capital asset and its calculation based on the year of the acquisition to the previous owner from whom the asset was inherited by the assessee instead adopting the year of acquisition as the year when the asset was actually acquired by the assessee.

2. The Appellant prays that the order of the Ld. CIT(A) on the above ground(s) be set aside and that of the Assessing Officer be restored.

Today none has come present on behalf of the assessee despite notice. However, the Ld. D.R. has fairly admitted that the issue is squarely covered by the decision of the Hon’ble Bombay High Court in the case of “CIT vs. Manjula J. Shah” (2012) 249 CTR (Bom.).

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.

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.

Order pronounced in the open court on 20.07.2016.

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