Income Tax Appellate Tribunal - Delhi
Aftab Seth, New Delhi vs Assessee on 11 September, 2008
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "A" NEW DELHI
BEFORE SHRI G.E. VEERABHADRAPPA : VICE PRESIDENT; AND
SRHI R.P. TOLANI : JUDICIAL MEMBER
ITA No. 3364/Del/08
Asstt. Yrs: 2005-06
Aftab Seth,Asstt. Vs. Director of Income-tax,
C/0 Sandeep K. Tandon International Taxation,
& Associates, CAs Cir. 2(2), New Delhi.
31/26, East Patel Nagar,
New Delhi-110008.
PAN/GIR no. AARPS7217G
( Appellant ) ( Respondent )
Appellant by : Shri Manjit Singh Sahni & Sh. S.K. Tandon CA
Respondent by : Shri M.P. Singh Sr. DR
ORDER
PER G.E. VEERABHADRAPPA, V.P:
This appeal, by assessee , arises out of the order dated 11-9-2008 of CIT(A)-XXIX, New Delhi, relating to A.Y. 2005-06.
2. The only effective ground raised by the assessee is against the order of CIT(A) in confirming the action of the Assessing Officer in assessing the long term capital gain on sale of property at Rs. 24,22,724/- as against Nil returned by the assessee.
3. The facts of the case are that the assessee sold property no. N-236, Greater Kailash, part-I, New Delhi, in which the assessee had 1/4th share. 2 The said property was inherited by him as a legal heir from his mother, who died on 14-2-2003. The property was held by the mother of the assessee prior to 1-4-1981 and fair market value of the property as on1-4-1981 was determined at Rs. 26,09,762/-. The Assessing officer while computing the indexed cost of acquisition took the cost inflation index at 447 for F.Y. 2002-03 as against the assessee's claim of taking the cost of inflation index at 100 corresponding to F.Y. 1980-81. There is no dispute that the property was inherited by the assessee as on 14-2-2003 on the demise of his mother. There is also no dispute that the fair market value of the property as on 1-4- 81 as per valuation report proposed by the registered valuer was Rs. 26,09,762/-. The Assessing Officer was of the view that Explanation 1(b) to Section 2(42A) of the Act be referred to the period to be counted for classification of an asset either as a short term capital asset or a long term capital asset. It has no bearing upon the computation of the indexed cost of acquisition with reference to the previous year for the purpose of giving deduction. Accordingly, in respect of cost of acquisition the Assessing Officer gave lower deduction while computing capital gains. In appeal the CIT(A) confirmed the action of Assessing Officer. The assessee is aggrieved.
3
4. The learned counsel for the assessee strongly pointed out that by virtue of Explanation 1(b) to section 2(42A), the property was held to be long term capital asset by including the period for which it was held by the previous owner. This fact has been accepted by the department. The learned counsel submitted that the indexation has to be allowed from 1-4-1981 which has substituted the cost of acquisition.. On 1-4-1981 the assessee himself was not the owner but the previous owner held the asset much prior to this date. The indexation is to be allowed from 1-4-1981 with reference to the cost as on 1-4-1981. The issue of this nature arose before several Benches of the Tribunal in the following cases:
(i) Kamal Mishra Vs. ITO (2008) 19 SOT 251; (ii) Mina Deogun Vs. ITO (2008) 19 SOT 183. (iii) Pushpa Sofat Vs. ITO 81 ITD 1. (iv) DCIT Vs. Smt. Meera Khera 2 SOT 902.
4.1. The learned counsel submitted that in all these cases the Tribunal has accepted that in such circumstances indexation has to be allowed from the date on which the previous owner held the property. He has filed copies of aforesaid decisions of the Tribunal in the paper book.
6. The learned DR, on the other hand, strongly relied upon the discussions in the order of the Assessing Officer and that of the CIT(A) in support of the departmental stand.
4
7. We have carefully considered the rival contentions and gone through the records. On facts there is no dispute between the parties that the assessee inherited the property on 14-2-2003 on the demise of his mother. The department accepts the asset to be long term capital asset although it was sold in A.Y. 2005-06 by considering the period during which the previous owner, namely, mother held the property in terms of Explanation 1(b) of Section 2(42A) of the Act. The AO has simply adopted the base year on the date when the assessee became the owner. But in our view, there could not be two different dates in respect of the same asset devolving upon the legal heir, one on the date to determine the cost of acquisition and another to determine the indexed cost of acquisition. Even otherwise, the period of holding for determination of the long term capital asset, included the period for which the previous owner held the asset that devolved upon the legal heir under the circumstances mentioned in section 49(1) of the Act. The issue in question has been the subject matter of detailed discussion in the orders of the ITAT in all the aforesaid cases and more particularly in the decision of ITAT Calcutta Bench in the case of Mina Deogun Vs. ITO (2008) 19 SOT
183. Having regard to discussions in these orders with which we are in full agreement, we accept the claims of the assessee and direct the Assessing Officer to recompute the cost of acquisition by taking 1-4-1981 as the base 5 year for the purpose of arriving at the indexed cost of acquisition. We order accordingly.
8. In the result, assessee's appeal is allowed.
Order pronounced in open court on 23-7-2009.
(R.P. TOLANI ) ( G.E. VEERABHADRAPPA ) JUDICIAL MEMBER VICE PRESIDENT Dated: 23-07-2009. MP Copy to : 1. Assessee 2. AO 3. CIT 4. CIT(A) 5. DR