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ADIT, Cir. 1(1), (Intl. Taxation), 204, Drum Shape Building, IP Estate, New Delhi 110 002 vs. Ms. Meena Chopra, P-13, Ground Floor,Malviya Nagar, New Delhi
May, 23rd 2012
                                                                 ITA NO. 2860/DEL/2011

                           DELHI BENCH "E", NEW DELHI
                      BEFORE SHRI A.D. JAIN, JUDICIAL 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.

      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


               "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

                                                      ITA NO. 2860/DEL/2011

                (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.

                                                         ITA NO. 2860/DEL/2011

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

                                                         ITA NO. 2860/DEL/2011

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."

                                                         ITA NO. 2860/DEL/2011

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
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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