Income Tax Appellate Tribunal - Mumbai
Darshan R. Shah ( Huf), Mumbai vs Assessee on 17 September, 2007
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "D", MUMBAI
Before Shri R.S.Syal, AM and Shri Vijay Pal Rao, JM
ITA No.1407/Mum/2010 : Asst. Year 2005-2006
Darshan R.Shah (HUF) The Income Tax Officer
3rd F;ppr. 15 Raotam Andi; Gaffar Khan Ward 15(1)(4)
Worli, Mumbai - 400 030. Mumbai.
Vs.
PA No.AAEHD1924L.
(Appellant) (Respondent)
Appellant by : Shri Bhupedra Shah
Respondent by : Shri Amol Kamat
ORDER
Per R.S.Syal, AM :
This appeal by the assessee arises out of the order passed by the Commissioner of Income-tax (Appeals) on 31.12.2009 in relation to the assessment year 2004-2005.
2. The only issue raised in this appeal is against the computation of capital gain amounting to Rs.7,58,834 by not allowing proper benefit of indexation. Briefly stated the facts of the case are that the assessee showed sale consideration of silver utensils amounting to Rs.10,99,986. Against this sale consideration, indexed cost of acquisition was shown at Rs.14,53,307 which resulted into loss of Rs.3,53,321. Apart from this, the assessee-HUF had only interest income amounting to Rs.25,731 which was offered for taxation after claiming deduction u/s.80-I. The assessee was asked to furnish the details as to how these silver utensils were acquired and whether these was purchased / received from the ancestors with documentary evidence. The assessee vide its letter dated 17.09.2007 stated that during the assessment years 1994-95 to 2002-2003 the assessee-HUF received gift of silver utensils from two HUFs R.A.Shah and A.M.Shah and also from Shri Ramnik Shah, Mrs.Lalita Shah and M/s.Madhuben Shah. The Assessing Officer 2 ITA No.1407/Mum/2010 Darshan R.Shah (HUF).
noted that the cost of acquisition was computed by adopting cost inflation index of 1981-82 for the purpose of indexation of cost to previous owner i.e. donor in this case. In the absence of any evidence to show that the capital assets sold by the assessee were received as gift during assessment years 1994-95 to 2002-2003 without specifying the exact date and years of receipt, the Assessing Officer presumed that the entire acquisition of said silver by way of gift was effected in the year relevant to assessment year 2002-2003. He applied cost inflation index accordingly and worked out long term capital gain of Rs.7,58,834. The learned CIT(A) upheld the view taken by the Assessing Officer.
3. We have heard the rival submissions and perused the relevant material on record. The Special Bench of the Tribunal in DCIT Vs. Manjula J.Shah. [(2009) 318 ITR (AT) 417 (Mumbai) (SB)] has held that indexed cost of acquisition is to be applied with reference to the year in which the previous owner held the asset and not the year in which the assessee became the owner of the assets. The Assessing Officer has gone by the year of acquisition by the assessee, which view cannot be sustained. In order to the eligible for claiming benefit of index cost of acquisition with reference to the year in which the previous owner first held the asset, it is necessary for the assessee to prove two things, viz., firstly the assessee acquired the capital asset from some previous owner and the secondly the year in which such capital assets were acquired by the previous owner. Here is a case in which the Assessing Officer has himself accepted that the silver was acquired by way of gift in the previous year relevant to the assessment year 2002-2003 and indexation was accordingly applied. It means that the fact of assessee having received gifts has been admitted by the A.O. However the second factor, which remains to be proved is the year in which such capital assets were acquired by the previous owners. It is naturally so because only on the basis of such acquisition by the previous owner that the cost inflation index shall apply accordingly. The assessee has claimed that this silver utensils were acquired from different persons during the previous year 3 ITA No.1407/Mum/2010 Darshan R.Shah (HUF).
relevant to the assessment year 1994-95 to 2002-2003, such as R.A.Shah and A.M.Shah and also from Shri Ramnik Shah, Mrs.Lalita Shah and M/s.Madhuben Shah. The onus is upon the assessee to prove that the silver utensils gifted by them to the assessee were acquired in the years as claimed. It is relevant so because proper year of acquisition of these persons can be determinative of the application of correct cost inflation index. The assessee has placed on record a Wealth-tax assessment order of Miss Mrudula A.Shah for assessment year 1980-81 in support of his contention that the silver was accepted in her assessment. However we find that the name of Miss Mrudula A.Shah is not appearing in the list of donors, as stated by the assessee before the Assessing Officer, which has been reproduced in the assessment order. In our considered opinion unless the assessee leads some evidence to demonstrate the dates of acquisition of silver by the donors, which subsequently became the subject matter of sale by the assessee, the correct computation of capital gains cannot be done. We, therefore, we set aside the impugned order and restore the matter to the file of AO with a direction to the assessee to lead evidence before the A.O. for showing that when these five persons acquired silver utensils which was gifted to the assessee. It is only thereafter, that the AO will compute long term capital gain by applying the correct cost inflation index in respect of these transactions.
4. In the result, the appeal is allowed for statistical purposes.
Order pronounced on this 22nd day of October, 2010.
Sd/- Sd/-
(Vijay Pal Rao) (R.S.Syal)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai : 22nd October, 2010.
Devdas*
4 ITA No.1407/Mum/2010
Darshan R.Shah (HUF).
Copy to :
1. The Appellant.
2. The Respondent.
3. The CIT concerned
4. The CIT(A) - XXVI, Mumbai.
5. The DR/ITAT, Mumbai.
6. Guard File.
TRUE COPY.
By Order
Assistant Registrar, ITAT, Mumbai.