ITA NO. 2860/DEL/2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "E", NEW DELHI
BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER
AND
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
I.T.A. No. 2860/Del/2011
A.Y. : 2007-08
ADIT, Cir. 1(1), (Intl. Taxation), vs. Ms. Meena Chopra,
204, Drum Shape Building, P-13, Ground Floor,
IP Estate, New Delhi 110 002 Malviya Nagar, New Delhi
(PAN/GIR NO. : ADBPC1895P)
(Appellant ) (Respondent )
Assessee by : Sh. Ranjan Chopra, CA
Department by : Sh. Sukhbir Choudhary, Sr. D.R.
ORDER
PER SHAMIM YAHYA: AM
This appeal by the Revenue is directed against the order of the
Ld. Commissioner of Income Tax (Appeals)-XXIX, New Delhi dated
03.3.2011 pertaining to assessment year 2007-08.
2. The grounds raised in the appeal by the Revenue read as
under:-
"1. On the facts and in the circumstances of the case, the
Ld. Commissioner of Income Tax (Appeals) has erred
in relying upon the decision of the Hon'ble Mumbai
ITAT, in the case of Manjula J. Shah 318 ITR (AT) 417
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(Mumbai, SB) and taking the year of acquisition of
property by the previous owner as the base year for
calculating the indexed cost of acquisition whereas it
should be date of acquisition of the same by the
present owner.
2. The appellant craves leave to add, amend, modify or
alter any grounds of the appeal at the time or before
the hearing of the appeal."
3. In this case the assessee sold her 22.5% shares in a property on
19.6.2006 for ` 3,64,50,000/- (being assessee's shares). Assessee had
acquired this share by becoming an owner of 12.5% shares in the
property on the death of her mother Smt. Pushpa Chopra on 3.9.2000
and 10% in the property on the death of her father Sh. Dina Nath
Chopra on 14.4.2004. While computing the long term capital gains
the assessee applied indexed cost of acquisition by taking F.Y. 1981-
82 as the base year whereas in the assessment order the Assessing
Officer took F.Y. 2000-01 as the base year for application of
indexation for determination of cost of acquisition in respect of 12.5%
shares and 2004-05 for 10% of her share. After allowing benefit of the
investment made by the assessee in REC bonds a net addition of `
14,67,130/- was made on this account.
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4. Upon assessee's appeal Ld. Commissioner of Income Tax
(Appeals) elaborately considered the issue and he noted that in this
case the assessee acquired 12.5% share in the property through
inheritance on the death of her mother on 3.9.2000 and 10% share in
the property on the death of her father on 14.4.2004. The previous
owners i.e. the father and the mother of the assessee owned this
property prior to 1.4.1981. Ld. Commissioner of Income Tax (Appeals)
observed that the issue involved in this appeal is what should be the
base year for calculation of indexed cost of acquisition of the property
in terms of Explanation (iii) to Section 48 of the Act, acquired by the
assessee by way of inheritance (one of the modes specified in section
49(1) of the Act). While the assessee has taken the base year to be
the financial year 1981-82 as the property was acquired by the
previous owners prior to 1.4.1981, the Assessing Officer has held that
it is to be the year of inheritance i.e. F.Y. 2000-01 and F.Y. 2004-05,
"first year when the asset was held by the assessee". Ld.
Commissioner of Income Tax (Appeals) referred to the various
decisions of the Tribunal. From the said ITAT cases, Ld.
Commissioner of Income Tax (Appeals) observed that ITAT, Mumbai
Special Bench in the case of DCIT vs. Manjulal P. Shah 35 SOT 105, has
held that it is the schematic interpretation of the relevant provisions of
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computation of Capital Gains which is relevant for correct appreciation
of the provisions and has overruled the Kishore Kanungo judgement
and has decided the issue in favour of the assessee. . Keeping in view
the facts and discussion as above, Ld. Commissioner of Income Tax
(Appeals) held that it is the base year for calculation of indexed cost of
acquisition of the property sold by the assessee should be adopted as
financial year 1981-82 as adopted by the assessee in her return of
income. Assessing Officer was directed accordingly.
5. Against the above order the Revenue is in appeal before us.
6. We have heard the rival contentions in light of the material
produced and precedent relied upon. We find that the issue is
squarely covered in favour of the assessee by the decision of the ITAT,
Special Bench decision in the case of Manjula J. Shah. Furthermore,
the Hon'ble Bombay High Court in the case of C.I.T. vs. Manjula J. Shah
has confirmed the order of the ITAT in ITA No. 3378 of 2010. The
Hon'ble High Court has concluded that "in the result, we hold that ITAT
was justified in holding that while computing the capital gains arising
on transfer of a capital asset acquired by the assessee under a gift, the
indexed cost of acquisition has to be computed with reference to the
year in which the previous owner first held the asset and not the year
in which the assessee became the owner of the asset."
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7. In the background of the aforesaid discussions and precedents,
we find that Ld. Commissioner of Income Tax (Appeals) has taken
correct view in the matter that the issue is squarely covered in
favour of the assessee. Accordingly, we uphold the order of the Ld.
Commissioner of Income Tax (Appeals) on this issue.
8. In the result, the appeal filed by the Revenue stands dismissed.
Order pronounced in the open court on 16/5/2012, upon
conclusion of hearing.
SD/- SD/-
[A.D. JAIN] [SHAMIM YAHYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date 16/5/2012
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant 2. Respondent 3. CIT 4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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