Dharamchand Amarchand Jain, Mumbai vs Department Of Income Tax

Income Tax Officer -19(3)(1) Shri Dharamchand Amarchand Jain Room No. 307, 3rd Floor 120, Bazaar Road, 1st Floor Vs. Piramal Chambers, Lalbaug Bandra (W), Mumbai 400050 Mumbai 400012 PAN - AABPJ1746M Appellant Respondent

Appellant by: Shri Akhilendra Yadav Respondent by: Shri Subodh Ratnakarkhi

Date of Hearing: 24.02.2015 Date of Pronouncement: 24.02.2015

ORDER

Per D. Manmohan, V.P.

This appeal by the Revenue arises out of the order dated 13.02.2013 passed by the CIT(A)-30, Mumbai.

2. Following grounds were urged before us: -

"(1) On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in directing to allow the cost of inflation index from 01.04.1981 on the basis of holding by the previous owner without appreciating the fact that the assessee has been the owner of 1/9th share of the property subsequent to the death of his father on 6.2.1995 and 7/9th of the property in F.Y. 2004-05 in view of the gifts deeds by co-owner.

(2) On the facts and in the circumstances of the case and in law, the Learned CIT(A) has failed to appreciate the fact that the Explanation (iii) to section 48 clearly states that the Cost Inflation Index shall be adopted from the first year in which the asset was held by the assessee.

(3) On the facts and in the circumstances of the case and in law, the Learned CIT(A) has failed to appreciate the fact that the decision of the Hon'ble Bombay High Court in the case of Manjula J. Shah (249 CTR 270) has not been accepted by the Department."

2 ITA No. 3138/Mum/2013 Shri Dharamchand Amarchand Jain

3. Facts necessary for disposal of the appeal are stated in brief. Assessee inherited from his father 1/9th share in the property. The remaining 8/9th shares were inherited by his brothers and sister of the assessee. Assessee inherited the property in 1995. Subsequently, in 2004 assessee received 7/9th share of the property as gift from his brothers and sister. This property was in turn sold during the previous year relevant to A.Y. 2008-09 for a consideration of `20 lakhs whereas as per Stamp Duty Act the valuation works out to `62,75,000/-. There is also no dispute about the fact that the cost of the property as on 01.04.1981 is `11,23,000/- If indexation method is applied the cost of the property at `11,23,000/- will give rise to indexation cost of `61,87,730/-.

4. The AO worked out the long term capital gains by holding that the assessee would be eligible for indexed cost of acquisition from the date on which the property was first held by the assessee and not for the period the property was held by the previous owner from whom he has received by way of inheritance/gift. Assessee challenged the view taken by the AO by contending before the CIT(A) that indexation ought to have been granted from 01.04.1981 in the light of the decision of the Hon'ble Bombay High Court in the case of Manjula J. Shah 355 ITR 474. With regard to the remaining share received as gift reliance was placed upon the decision of the Hon'ble Bombay High Court in the case of Janhavi S. Desai (ITA No. 126 of 2011).

5. Having regard to the circumstances of the case the learned CIT(A) observed as under: -

"On the issue of indexation I find that the decision of the Bombay High Court in the case of Manjula Shah, is directly applicable to the 1/9th share inherited by the appellant from father. AO is therefore directed to grant indexation w.e.f. 1.4.1981 in respect of this share."

"The Hon'ble Court have elaborated upon the provisions of section 49(1) Explanation defining previous owner and its incorporation in Explanation (1)(i)(b) to section 2(42A) and have come to the conclusion that in circumstances provided in sec. 49(1), the period during which asset was held by the previous owner referred to in that section shall be included. It is consequently held for the remaining 7/9th share received by appellant as gift from brothers and sisters, the indexation 3 ITA No. 3138/Mum/2013 Shri Dharamchand Amarchand Jain

will have to be given from April 1st, 1981. The AO is directed accordingly. This takes care of first ground of appeal of the appellant."

6. Aggrieved, Revenue is in appeal before us. At the time of hearing the learned D.R. submitted that both the issues stand covered by the decision of the Hon'ble Bombay High Court but the appeal was preferred because the Revenue has not accepted the view taken by the Hon'ble Bombay High Court. Having regard to the principles laid down by the jurisdictional High Court, in the aforecited cases, we do not find any infirmity in the order passed by the learned CIT(A).

7. In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 24th February, 2015.

Sd/- Sd/- (D. Karunakara Rao) (D. Manmohan) Accountant Member Vice President

Mumbai, Dated: 24th February, 2015

Copy to:

1. The Appellant 2. The Respondent 3. The CIT(A) - 30, Mumbai 4. The CIT- 19, Mumbai City 5. The DR, "D" Bench, ITAT, Mumbai

By Order

//True Copy// Assistant Registrar ITAT, Mumbai Benches, Mumbai n.p.