Income Tax Officer Vs Sohrab Fali Mehta (ITAT Mumbai)
ITAT Mumbai held that while computing capital gains arising of transfer of capital asset acquired by the assessee under the will, the indexed cost of acquisition has to be computed with respect to the year in which the previous owner first held the asset.
Facts- In A.Y. 2016-2017, the assesse earned long-term capital gain from sale of assessee’s share in the immovable property inherited by assessee from his mother in A.Y. 2008-2009.
Notably, AO agreed with the assessee that the cost of acquisition should be the cost in the hands of the previous owner. AO however, did not agree with the plea of the assessee that assessee is entitled for indexation benefit from 01/04/1981. The main plea of the AO is that the mother of the assessee died on 09/03/2008 and therefore, the assessee became entitled to share in the property through the will of the mother and hence, the assessee can be allowed indexation only from F.Y.2007-08 and not from F.Y.1981-82.
Conclusion- Hon’ble Jurisdictional High Court after due consideration of CBDT Circular No.636 had held that while computing capital gains arising of transfer of capital asset acquired by the assessee under the will, the indexed cost of acquisition has to be computed with respect to the year in which the previous owner first held the asset and not in the year in which assessee became the owner of the asset.
Respectfully following the said decision, we hold that assessee would be entitled for indexed cost of acquisition benefit from F.Y.1981-82 on the cost of Rs.33,82,900/-. Accordingly, the ground No.1 raised by the Revenue is dismissed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal in ITA No.55/Mum/2023 for A.Y.2016-17 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-57, Mumbai in appeal No.CIT(A)-57/Mumbai/10217/2018-19/for A.Y.2016-17 dated 03/10/2022 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 31/12/2018 by the ld. Income Tax Officer, INT Tax Ward 3(2)(1), Mumbai (hereinafter referred to as ld. AO).
2. The Revenue has raised the following grounds of appeal:-
“1. Whether on the facts and circumstances of the case and in law, the LA CIT(A) has erred in allowing the Indexation on the basis of Hon ’ble Bombay High Court decision in the case of CIT us. Manjula J Shah (355 ITR 474) Wherein the department had filed SLP in that case which was dismissed without discussing the issue on merit as the tax effect involved in the said case was below Rs. 1 Crore.
2. Whether on the facts and circumstances of the case and in law, the LA CIT(A) has erred in allowing the following expenses incurred by the assessee on transfer of his 15% share in the property on the ground that the assessee had incurred these expenses wholly and exclusively for the transfer of his property whereas no documentary evidences has been provided by the assessee during the course of assessment proceedings
