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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI G.S.PANNU& SHRI RAM LAL NEGI.
ORDER PER G.S.PANNU, A.M: The captioned appeal filed by the assessee pertaining to assessment year 2010-11 is directed against an order passed by CIT(A)- 8, Mumbai dated 1/10/2013, which in turn arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 24/12/2012.
In this appeal, assessee has raised two issues, which we shall deal in seriatim. The first substantive dispute is with regard to the manner of calculation of long term capital gain earned by the assessee on sale
(Assessment Year : 2010-11) of property. In the return of income assessee had declared long term capital gain on sale of property at Rs.29,02,270/- after considering the indexed cost of acquisition at Rs.19,93,232/-. The difference between the assessee and the Revenue is in the manner of calculating indexed cost of acquisition. As against Rs.19,93,232/- calculated by the assessee, the Assessing Officer determined the same at Rs.15,22,158/-. In this context, the relevant facts are that asessee, an individual become member of a housing society somewhere in 1993 and he was allotted a flat in 1994. The housing society constructed and allotted flats to all the members. The assessee claimed that right from 1994, he was paying the proportionate cost of construction as and when called upon by the society. As per tabulation of payments, reproduced in para 3.1 of the CIT(A)’s order, assessee made payments of Rs.12,50,000/- on various occasions from 26/09/1994 to 30/12/2006. While calculating indexed cost of acquisition, assessee adopted the cost inflation index, corresponding to the year of each of the payment. In this manner, the indexed cost of acquisition was determined at Rs.19,93,232/-. The Assessing Officer and thereafter CIT(A) however held that property tax assessment bill issued by the Municipal Corporation showed that the said flat was assessed to property tax from 01/01/2007 and, therefore, the date of acquisition of the property was to be taken as 01/01/2007. Accordingly, indexed cost of acquisition was determined by adopting 01/01/2007 as the date of acquisition of the flat. This resulted in a reduced indexed cost of acquisition by a sum of Rs.4,71,074/-, which is the subject matter of dispute before us.
(Assessment Year : 2010-11) 3. Before us, the Ld. Representative for the assessee pointed out that assessee was duly allotted the flat in 1994 and payments were made on various dates upto 30/12/2006 and, therefore, the indexed cost of acquisition has to be granted to the assessee right from 1994 when he started making payments and not merely 01/01/2007 when the property was subject to property tax assessment. In support, the Ld. Representative for the assessee has relied upon the following decisions:- (1) Praveen Gupta vs. ACIT, 52 DTR (Del)(Trib) 334. (2) Ms. Nita A. Patel vs. ITO, 128 ITD 24(Mum)
On the other hand, Ld. Departmental Representative defended the orders of the authorities below by pointing out that property can be said to be acquired by the assessee only when the final registration deed is made and, therefore, the adoption of the date of 01/01/2007 as the relevant date is quite justified. Therefore, indexed cost of acquisition has been rightly calculated by the lower authorities.
We have carefully considered the rival submissions. In this case, there is no dispute that assessee was a member of housing society called Charkop Sajawat CHS, who was allotted a plot of land for construction of residential flats for its members. The discussion in the orders of authorities below reveals that the said society was allotted a plot by MHADA and conveyance deed was made in favour of the society in 1994. Being a member of the said society, assessee was allotted a flat and was issued the share certificate in 1994, a copy of which is also placed in the Paper Book filed before us. Further, on 30/06/1995,
(Assessment Year : 2010-11) assessee was also issued an allotment letter for the specific flat, a copy of which is placed at pages 8 to 10 of the Paper Book. In the meanwhile, the assessee made payments to the society as and when called upon to do so and the said schedule of payments have been reproduced by CIT(A) in para 3.1 of his order. The payments have been made on various dates upto 20/12/2006 cumulating to Rs.12,50,000/-, which is stated to be the cost of acquisition. The indexed cost of acquisition is sought to be calculated based on the cost inflation index of the each year of payment. In the aforesaid background, in our view, it is not necessary that assessee must become owner by way of conveyance deed for the purposes of computing capital gains. Ostensibly, assessee acquired a right to obtain a particular flat in the society in 1994 itself, being its member, and he was allotted a specific flat. In any case, such right itself is a capital asset and, therefore, the indexation of the cost of acquisition of the flat has to be granted with respect to the initial date of 26/09/1994, subject of course to the adoption of indexation factor corresponding to the dates of payments. Even otherwise, we find no reason to deny the claim of the assessee, which in consonance with the decision of the Delhi Bench of the Tribunal in the case of Praveen Gupta(supra), which covers an identical situation. Before us, no decision to the contrary has been brought out and, therefore, we find ample force in the plea of the assessee. Accordingly, the order of the CIT(A) is set-aside and the Assessing Officer is directed to recompute the capital gain by adopting indexed cost of acquisition at Rs.19,93,232/- as against Rs.15,22,158/- considered earlier. Thus, on this aspect, assessee succeeds.
(Assessment Year : 2010-11) 6. The other issue arises from a disallowance of Rs.2,000/- made by Assessing Officer by invoking section 14A of the Act. In this context, brief facts are that assessee was found to have earned dividend of Rs.7,440/- and interest on PPF of Rs.2,618/-, which were claimed as exempt. The Assessing Officer disallowed a sum of Rs.2,000/- under section 14A of the Act on the ground that the said sum related to the earning of exempt income. The CIT(A) affirmed the action of the Assessing Officer.
We find that before the lower authorities as well as before us assessee has been asserting that no expenses have been claimed by the assessee at all and, therefore, the question of disallowance under section 14A of the Act would not arise. The aforesaid factual assertion, which has been consistently made by the assessee, has been merely brushed aside and not controverted by the lower authorities. Even before us, Ld. Departmental Representative has not controverted the factual assertions of the assessee. In our considered opinion, in view of the aforesaid factual position, which has not been disputed, there is no justification for making any disallowance under section 14A of the Act, in as much as, no expenses are stated to have been claimed while computing the total income. Accordingly, the disallowance is hereby directed to be deleted.