ITO, CHENNAI vs. GAYATRI RAO, CHENNAI

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ITA 531/CHNY/2015Status: DisposedITAT Chennai07 August 2015AY 2006-074 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 as per Section 49 of the Act, when a property is inherited, the cost of the property to the previous owner (the father) should be considered for indexation. The lower authorities' decision was confirmed.

What were the facts?

The Revenue appealed against an order allowing the assessee to claim indexation from 1981 for a property inherited from her father. The Revenue argued that indexation should be from the date of inheritance, not the father's acquisition date.

What were the issues?

The key issue was whether the cost of acquisition for capital gains indexation should be the date of inheritance or the original acquisition date by the previous owner when the property was inherited.

Which sections of the Income-tax Act were involved?

Section 49,Section 48

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, S M C BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN

Hearing: 10.07.2015Pronounced: 07.08.2015

आदेश /O R D E R

1.

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.

2.

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

However, she is claiming indexation from 1981. According to the Ld. D.R., the date on which the assessee inherited the property from her father has to be taken into consideration for the purpose of computation of capital gain and not from the date on which her father owned the property. The Ld. D.R. placed his reliance on Explanation (iii) to Section 48 of the Income-tax Act, 1961 (in short "the Act").

3.

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.

4.

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.

5.

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

Order pronounced on 7th August, 2015 at Chennai.

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