ITO, CHENNAI vs. GAYATRI RAO, CHENNAI

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-16, Chennai, dated 27.01.2015 and pertains to assessment year 2006-07. The only issue arises for consideration is with regard to determination of fair market value for the purpose of computing capital gains.

Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that the assessee inherited a property from her father.

On the contrary, Shri D. Anand, the Ld. counsel for the assessee, submitted that as per Section 49 of the Act, when a property was inherited from parents, the cost of the property to the parents has to be taken for the purpose of indexation. The Ld. counsel placed his reliance on the decision of this bench of the Tribunal in ITO v. Shri Syed Shirazi in dated 30.10.2014 and submitted that this Tribunal, by placing reliance on the judgement of Bombay High Court in CIT v. Manjula J. Shah (2013) 355 ITR 474, found that the cost of indexation has to be computed by taking into consideration the cost of the property for which the parents of the assessee acquired it.

I have considered the rival submissions on either side and perused the relevant material on record. Admittedly, the property was inherited by the assessee from her parents. Therefore, in view of Section 49 of the Act, the cost of the property as that of the previous owner has to be taken for consideration. In fact, the CIT(Appeals) by following the judgement of Bombay High Court in CIT v. Manjula J. Shah (supra), has allowed the claim of the assessee. This Tribunal in the case of Shri Syed Ali Shirazi (supra) has also confirmed an identical issue by placing reliance on the above said judgement of Bombay High Court. Therefore, this Tribunal do not find any infirmity in the order of the lower authority and accordingly, the same is confirmed.

In the result, the appeal of the Revenue is dismissed.