Income Tax Appellate Tribunal - Delhi
Sheetal Behl, New Delhi vs Department Of Income Tax on 11 July, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'G', NEW DELHI
BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER
&
SHRI B.C. MEENA, ACCOUNTANT MEMBER
ITA No. 6444/Del/2012
Assessment Year: 2009-10
DCIT, vs. Sheetal Behl,
Circle 22(1), Room No. 238-B, 22, Sukhdev Vihar,
2nd Floor, C.R. Building, I.P. Estate, New Delhi.
New Delhi. ACSPB4045Q
(Appellant) (Respondent)
Appellant by: Sh. G.S. Sema, Sr. DR
Respondent by : Sh. Ajay Wadhwa, Adv.
ORDER
PER DIVA SINGH, J.M.
This is an appeal filed by the Revenue against the order dated 25.10.2012 of CIT(A)-XXIII, New Delhi, pertaining to the A.Y. 2009-10 on the following grounds: -
1) "On the facts and in the circumstances of the case the ld. CIT(A) has erred in deleting the addition of Rs. 69,28,750/- made by the Assessing Officer on account of exemption claimed u/s 54 of the I.T. Act.
2) The appellant craves leaves to add, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal."
2. The relevant facts of the case are that the assessee declared an income of Rs. 79,39,430/- by way of filing his return on 31/07/2009, which was processed u/s 143(1) and subsequently selected for scrutiny assessment through CASS. Accordingly after issuance of notice u/s 143(2) and 142(1) along with questionnaire etc. the Assessing Officer ITA No. 6444/D/2012 2 required the assessee to furnish complete details of exemption claimed u/s 54 of the Income Tax Act, 1961. For ready reference we extract para 4 & 5 of the assessment order hereunder in order to address the factual aspect which he required the assessee to explain.
4. "The facts of the case are that the assessee received by way of gift half share of property No.C-2/8, Vasant Vihar, New Delhi, from her mother Mrs. M.H. Hira w/o Late Shri H.V.Hiranandani on 27.02.2008. The assessee alongwith the other co-owner of the property i.e. Shri G.V.Hiranandani entered into Collaboration Agreement with M/s Windchimes Constructions Pvt. Ltd. (Builder) on 21.04.2008. The builder was required to demolish the existing structure and building comprising of basement, ground floor, first floor, second floor and terrace was to be constructed. As per the Collaboration Agreement it was agreed that a sum of Rs.6,82,50,000/- shall be paid to Shri G.V.Hiranandani (Owner No.1) as non-refundable amount/consideration. It was agreed that Owner No.-1 shall have no right, title or interest of any nature in the newly constructed building and the said plot of land. Further Owner No.2 i.e. the assessee was to get possession of the second floor, terrace rights and one car parking space in drive way along with proportionate undivided, indivisible and impartibly ownership rights in the said plot of land measuring 400 sq. yds., besides a sum of Rs.1,82,50,000/-.
5. Though the assessee became owner of this property only by virtue of gift deed dated 27th February, 2008; the assessee has claimed the indexation for the purposes of calculation of Long Term Capital Gain for the year 1981-
82. Whereas the explanation (iii) in Section 48 of the Income Tax Act 1961 provides that the applicable Cost Inflation Index ("CII") will be the CII for the first year in which the asset was first held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later. Considering this the assessee vide order sheet entry dated 13.10.2011, was required to explain as to why the long term capital gain on sale of house property should not be increased by Rs.69,28,750/- and an addition of Rs.69,28,750/- should not be made in the total income. Further the assessee claimed the indexed cost of acquisition by taking the indexation as on 01.04.1981 at Rs.80,63,610/- which should have been at Rs.14,63,450/- by taking the indexation of F.Y. 2007-08 because the property in question was inherited property and provisions of section 48 Explanation (iii) of the I.T. Act 1961, will apply. Similarly the cost of improvement should have been Rs.2,61,160/- instead of Rs.5,89,750/- claimed as indexed cost of improvement by taking the indexation of F.Y.93-94. As per the provisions of section 48 Expn. (iii) of the I.T. Act 1961, the benefit of indexation to the assessee will be the cost of indexation of the year in which ITA No. 6444/D/2012 3 asset is first held by the assessee and in her case the asset was acquired on 27.02.2008 (F.Y.2007-08)."
3. The assessee in response submitted that since the property had been received by way of gift hence the value thereof was to be indexed as on 01/04/1981 and not from 27/02/2008. In support of the said contention reliance was placed upon DCIT vs. Manjula J. Shah (2010) 35 SOT 105 (Mum.) (SB).
4. The explanation offered by the assessee was not accepted by the AO. Relying on various decisions, specifically the order of the Mumbai Bench of the Tribunal in the case of DCIT vs. Kishore Kanungo (2006) 290 ITR 298; and order dated 25/01/2008 in ITA No. 1336/Del/2005 rendered by the Delhi Bench of the Tribunal in the case of Arun Shungloo Trust, the AO was of the view that these orders squarely cover the facts of the present case. Referring to the same wherein it had been held that in cases of certain types of transfer of capital asset like inheritance, succession etc. the indexation benefit will be available only from the year in which the asset was first held by the current owner i.e. the assessee and not from the year when the asset was held by the earlier owner/previous owner he rejected the assessee's contention. Accordingly indexation benefit for computing the indexed cost of acquisition was taken with respect to the year when the asset was first held by the assessee i.e. F.Y. 2007-08 for which the cost of CII was 551 ITA No. 6444/D/2012 4 as a result of this addition of Rs. 69,28,750/- was made to the declared income under the head "long term capital gains".
5. The assessee agitated the issue before the First Appellate Authority. A perusal of the written submissions extracted in para 4 of the CIT(A)'s order shows that it was reiterated that the residential property was received by the assessee from her mother i.e. half share of residential property No. C-2/8, Vasant Vihar, New Delhi from her mother Mrs. M.H. Hira w/o Late Sh. H.V. Hiranandani on 27/02/2008 and the holding period of the property read with section 49(1) was as per the following Succession Tree:
Succession Tree of Property No. C-8/2, Vasant Vihar, New Delhi-110057 Original Original Joint Owner:
Sh. Vishindas Guljarimal Hiranandani & Smt. Kamla Vishindas Hiranandani (by virtue of perpetual sub-lease dated 22.06.1971) ½ Share of Sh. Vishindas Guljarimal Hiranandani inherited by Smt. Kamla Vishindas Hiranandani (by will on death of Sh. Vishindas Guljarimal Hiranandani on 10.09.1986) On death of Smt. Kamla Vishindas Hiranandani on 11.04.1990, ½ Share each inherited by will by her only two sons:
Mr. Hiru Vishindas Hiranandani Mr. Gobind Vishindas Hiranandani (H.V. Hiranandani) (G.V. Hiranandani)
On death of Mr. H.V. Hiranandani on 28.04.1992, his ½ share inherited by will by his wife Mrs. Mithu Hiru Hira (M.H. Hira) On 27.02.2008 Mrs. H. Hira transferred her ½ share to her daughter Mrs. Sheetal Bahl by way of Gift.
5.1. Referring to the same it was claimed that the holding period of the assessee started w.e.f. 1971 which works out to more than 3 years ITA No. 6444/D/2012 5 and consequently the calculations were to be made w.e.f. 01/04/1981.
The following submissions on facts are also found to have been made:-
• "The assessee along with the other co-owner of the property i.e. Shri G.V. Hiranandani entered into Collaboration Agreement with M/s Windchimes Constructions P. Ltd. (Builder) on 21.04.2008. The Builder was required to demolish the existing structure and building comprising of basement, ground floor, first floor, second floor and terrace was to be constructed. As per collaboration agreement, it was agreed that a sum of Rs. 6,82,50,000/- shall be paid to Shri G.V. Hiranandani (Owner) as non refundable amount. The assessee was to get possession of second floor, terrace rights and one care parking space in drive way along with proportioned undivided, indivisible and impartibly ownership rights in the said plot of land measuring 400 sq. yrd., besides a sum of Rs. 1,82,50,000/-.
• The assessee computed Long Term Gains as per relevant provisions dealing with computation of Income from the head "Income from Capital Gain" as contained in section 45 to 55A read with other provisions under Income Tax Act, 1961. STATEMENT OF LONG TERM CAPITAL GAIN OF PROPERTY NO. C- 8/2,VASANT VIHAR, NEW DELHI-110057 AS CALCULATED BY ASSESSEE Particular Sales Indexed Transfer Indexed Exemp Capita Price/Yea Cost/Year Expenses Cost of t l Gain r Improvement ½ share of 6825000 8063610 958430 58975 50000000** 86382 C-8/2, 0 0 * 1 Vasant (21/04/0 Vihar, 8) New Delhi Tota 68250000 8063610 958430 589750 50000000 863821 l ½ SHARE OF C-8/2, VASANT VIHAR, NEW DELHI *Cost: 1385500(582/100) = 8063610 **Cost of Improvement: 247249(582/244) = 589750 ***Exempt u/s 54: 50000000"
5.2. Accordingly, referring to the two sections 29A; 2(42A); Explanation 1(b) to section 2(42A) and the expression "indexed cost of acquisition" used in section 48 defined in Explanation (iii) and Explanation ITA No. 6444/D/2012 6
(iv) it was submitted that the claim had wrongly been rejected by the AO and infact was fully covered in the assessee's favour by virtue of the order of the Mumbai Bench of the Tribunal in the case of CIT vs. Manjula Shah.
Referring to the decision relied upon the AO mainly Kishore Kanungo, it was submitted that the same stood reversed by the Hon'ble High Court and the following orders further supported the view of the assessee: i) Meena Devgan, 117 TTJ 121 (Kol.) and Pushpa Sofat, 81 ITD 1 (Chd.) (SMC).
5.3. It was further submitted that the order of the Tribunal in Manjula Shah was confirmed by the Hon'ble High Court on 11/10/2011 and the decision in Arun Shungloo Trust relied upon by the AO also stood reversed by the Delhi High Court and reliance was further placed on CIT- 18 Mumbai vs. M/s Janhavi S Desai (2012) 24 taxmann.com 314 (Bom.) dated 05.07.2012. Considering the same the CIT(A) came to the following conclusion:
6. "I have carefully considered the appellant's submissions and perused the cases laws relied on by the appellant. In respect of Ground of Appeal No. 1 relating to the indexed cost of acquisition of the capital asset, the AO has held that the appellant had become the owner of half share of the property by way of gift from her mother on 27.02.2008. While the AO has allowed the market value as on 1.4.1981 to be the cost of acquisition of the property, however, he has allowed the indexation of the cost of half of the property only from the year in which the appellant received the gift. I find that this issue stands fully covered by the order of the Special Bench of ITAT, Mumbai in the case of Manjula J. Shah [2009] 318 ITR 417.
The Hon'ble Tribunal has referred to the provisions of Explanation 1(b) to section 2(42A), Explanation (iii) to section ITA No. 6444/D/2012 7 48, section 49(1) and section 55(2)(b)(ii) to hold that in cases of capital assets acquired through gift, inheritance, etc. for the purpose of computing long term capital gains, the first year in which the capital asset was held by the assessee has to be determined to work out the indexed cost of acquisition after taking into account the period for which the capital asset was held by the previous owner. I have also taken note of the recent judgment of the Delhi High Court in the case of Arun Shungloo Trust vs. CIT (2012) 205 Taxman 456, wherein the Mumbai Special Bench order has been followed. Hence, the judgment of the ITAT, Delhi, in the same case has been over ruled.
Respectfully following the judgment of the Delhi High Court, it is held that the indexed cost of acquisition of the capital asset acquired by the appellant through gift has to be computed with reference to the year in which the previous owner first held the asset. Accordingly, Ground of Appeal No. 1 is held in favour of the appellant."
6. Aggrieved by this the Revenue is in appeal before the Tribunal. The ld. Sr. DR, Sh. G.S. Sema, relied upon the assessment order and the order of the Delhi Bench of the Tribunal in the case of Arun Shungloo Trust submitted that no doubt the decision of the Hon'ble High Court is available, however, the Department may have gone in appeal before the Apex Court and on facts how relevant documents show that the property came to the assessee needs to be verified. It was further contended that looking at the quantum involved in the appeal the issue should be decided in Revenue's favour or restored to the AO.
7. The Ld. AR on the other hand, relying upon the impugned order contended that the issue is fully covered in assessee's favour by virtue of the judgment of the Jurisdictional High Court. The facts it was submitted, are not in dispute. It was submitted that the argument advanced as a last ditch effort to delay the hearing on the probable reasoning that the issue may be pending before the Apex Court should be outrightly rejected as no attempt has been made by the ITA No. 6444/D/2012 8 Ld. SR DR to actually verify whether any SLP has been filed or not. It was contended that the argument advanced casually without actually finding out the correct position should be deprecated. Further it was also his contention that even if SLP was filed against the decision of the Jurisdictional High Court rendered in February, 2012 then by now the same may have been dismissed. Carrying the argument further it was submitted that as on date the judgement of the Jurisdictional High Court is available and no contrary judgement has been referred by the Ld. Sr. DR the appeal accordingly should be decided on the basis of law as it stands today. It was further contended that by advancing such half baked arguments by raising a specious plea that even facts need verification when the AO has himself accepted the devolvement of the property by way of gift on the assessee it was argued is an act of harassment for the assessee for which in fact "costs" should be imposed on the Revenue. It was argued that not only the Ld. Sr. DR is travelling beyond the ground raised he is also travelling beyond the assessment order itself as there is no dispute on facts which have been taken note of in the assessment order itself and the Assessing Officer considering the undisputed facts followed the view propounded by the Mumbai Bench in Kishore Kanungo and of the Delhi Bench in Arun Shungloo Trust vs CIT as opposed to the decision relied upon by the assessee in the case of Manjula J.Shah.
8. We have heard the rival submissions and perused the material available on record. On a consideration of the entire factual matrix we find that the ITA No. 6444/D/2012 9 manner in which the property of the assessee has devolved upon the assessee has been accepted by the AO himself. This fact would be evident from the para 4 and 5 of his order which has been extracted in the earlier part of this order by us. It is seen that relief has been denied by the AO on the footing that benefit of indexation is available only from the date the property devolved on the assessee by way of gift and not from the date when it was held by the previous owner. Accordingly the property devolving on the assessee on a specific date has been accepted by the AO himself and the fact that the date on which the said owner has been considered to be not a relevant date relying upon the decisions of Kishore Kanungo and Arun Shungloo Trust as opposed to the decision in Manjula P. Shah is a fact on record. It is even otherwise seen that nothing has been placed by the Revenue to challenge the validity of the succession tree reproduced in the impugned order which is also found reproduced in the statement of facts filed before the CIT(A). The AO as observed has only disputed the fact that indexation benefit should be given from the date when the property was first held by the assessee and not from the date when the property was held by the previous owner. Accordingly in these peculiar facts and circumstances available on record, the request of the Ld. Sr. DR for restoring the issue again to the AO has no basis and the perceived perception of the Ld. AR that it amounts to harassment cannot be outrightly ruled out.
ITA No. 6444/D/2012 108.1. Reverting to the issue under challenge it is seen that it is no longer res-integra as the decisions of the Co-ordinate Bench sitting at Delhi and Mumbai Benches have been reversed. The order of the Tribunal in Arun Shungloo Trust has been reversed by the Jurisdictional High Court as would be evident from a perusal of the judgement of the Jurisdictional High Court rendered on 13.02.2012 reported in 249 CTR 294 (Del) and the decision of the Mumbai Bench in Manjula J. Shah has also been confirmed by the Hon'ble Bombay High Court in CIT vs Manjula J.Shah (2013) 355 ITR 474 (Bom.) ignoring the view taken in DCIT vs Kishore Kanungo 102 ITD 437 (mum.) which was specifically relied upon by the Revenue. In the afore-mentioned peculiar facts and circumstances, we do not find any merit in the Ld. Sr. DR's submission that there may have been a Special Leave Appeal filed against it by the department. The mere filing of a SLP or a Civil Appeal by a party cannot be a ground for either seeking a reversal of the impugned order or for seeking an adjournment. The Courts and Tribunals are necessarily required to decide the issues arising before them on the basis of law as available on date and not keep the issues in abeyance ad infinitum on the plea that the decision has or may have been appealed against before a Higher Forum. In the facts of the present case it is seen that the Ld. Sr. DR has made no attempt whatsoever to even seek an adjournment to verify the actual position and has merely made the submission casually. It is a settled legal position that in case there is any interim order of a Higher Appellate Forum staying the proceedings, the Tribunal is bound to follow it. However merely because a ITA No. 6444/D/2012 11 SLP may have been filed or a Civil Appeal may be pending the hearings are not required to be adjourned unless it is a case that hearing has concluded and judgement is awaited. In that situation it may be appropriate to await the decision. However in the facts of the present case no such plea was raised and the argument advanced casually suggests sheer lack of preparation on the part of the Revenue which is unfortunate. Considering the legal precedents where the decision of the Jurisdictional High Court is available and there is no contrary decision either of the Jurisdictional High Court or the Apex Court, we find no good reason to come to a contrary view than the view arrived at in the impugned order.
8.2. Before concluding we also deem it appropriate to address the argument of the Ld. Sr. DR made in passing that since the amount involved is "big" as such the issue should be restored or decided in Revenue's favour. Considering the argument advanced, we find ourselves surprised and aghast at the request made and unable to accede to the said request. The said request raises no issue of legal relevance and at best suggests lack of exposure and training. The issues before the Tribunal are to be decided on the basis of facts, legal precedents and the arguments advanced on the facts and precedents and as far as the amounts involved are concerned they should not impact the intellect so as to inhibit the arguments or blind the judgement. To our minds the department ideally ought not to be guided by "big" and "small" amounts as what may be perceived by the department as a ITA No. 6444/D/2012 12 "small" amount may be sufficiently "big" for a particular assessee and vice versa. The guiding light should be just and fair representation which can only done when the preparation is complete. The attitude to moonlight the posting as a Departmental Representative before the Tribunal should be effectively addressed as the posting should not be seen as a haven for reluctancy to work as it breeds the unwanted and unwarranted public perception of callousness, indifference, unfairness and harassment of the tax payers at the hands of the Revenue. Seeking adjournments frivolously does not serve the purpose as quick and speedy decision is in the interests of both the parties. No purpose is served by letting the issue linger unnecessarily on the perception that being a huge amount the matter should be deferred or the issue be restored somehow. The issue which can be decided on facts should not be artificially kept alive by seeking a remand to the AO without any basis. Even otherwise dehors any other argument, to only refer to amounts and seek a restoration is a frivolous and irrelevant argument and fosters the perception of callousness. Submissions seeking re-adjudication on settled facts unless warranted by facts is not acceptable as it harms the trust reposed by the general public in the fairness as well as capability of the department and if allowed would seriously prejudice the trust reposed in the justice delivery system. The Tribunal under law is mandated to decide the issues raised by way of specific grounds on appeal by the parties before it and it is painful to observe that it most definitely does not behove the department to show a reluctance in advancing arguments on the ground that the amounts involved ITA No. 6444/D/2012 13 are "big". Being conscious of the fact that the departmental representatives may not have been supported by adequate training and exposure as such we believe the issues may be addressed by providing training and exposure as Revenue Officers are the interface of the government with the tax payers and their actions and inactions should not adversely impact the public perceptions of their fairness and impartiality. It cannot be over emphasized that as a departmental representative the DR too is an officer of the Court like the Advocate and is duty bound to render full assistance to the Bench in order to ensure that the appeal is decided as per law and not be unduly carried away by the amounts involved de hors the merits of the issue under adjudication.
9. Accordingly on a consideration of the facts as they stand and the legal position as available on record as on date following the judicial precedent which has not been upset by any judgement to the contrary by the Hon'ble Apex Court for the detailed reasons given hereinabove we are of the view that the departmental appeal by way of the grounds raised has no merit. The impugned order accordingly is upheld and the appeal is dismissed.
10. In the result, the Revenue's appeal is dismissed as per the pronouncement made in the Open Court at the time of hearing on 11th July 2014.
Sd/- Sd/-
(B.C. MEENA) (DIVA SINGH)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 11.07.2014
*Kavita & Amit Kumar*
ITA No. 6444/D/2012 14
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, New Delhi.
TRUE COPY
By Order
ASSISTANT REGISTRAR