Introduction: In the case of Easwari Sukanya Krishnan Vs. Income Tax Officer (ITO), the Income Tax Appellate Tribunal (ITAT) in Chennai ruled on the determination of the base year for availing indexation benefits in respect of inherited properties. The revenue challenged the assessee’s claim of indexation from a specific financial year.
Analysis: The assessee had sold a property during the relevant year and claimed indexation of the cost from the financial year 2001-02 i.e. year in which property was acquired by mother from whom assessee inherited the property, resulting in a capital loss. The Assessing Officer (AO) disagreed with the assessee’s claim and allowed indexation benefits only from the financial year 2014-15, leading to a re-computation of gains. The assessee relied on a decision of the Hon’ble High Court of Madras in CIT vs. Saroja Naidu (128 Taxmann.com 127) to support their computations.
The key issue in the appeal was the determination of the base year for indexation benefits. The AO rejected the assessee’s claim, but the Commissioner of Income Tax (Appeals) allowed it based on the cited decision of the Madras High Court. The revenue then appealed to the ITAT.
The ITAT observed that the impugned order followed a binding judicial precedent set by the jurisdictional High Court. The revenue could not provide any contrary argument to challenge this position. Consequently, the ITAT upheld the indexation benefit as per the judicial precedent of the Madras High Court.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. The sole grievance of the revenue in the captioned appeal is determination of base year from which the benefit of indexation would be available to the assessee. At the time of hearing, none appeared for assessee and accordingly, the appeal was disposed-off with the able assistance of Ld. Sr. DR who pleaded for restoration of assessment Upon perusal of case records, the appeal is disposed-off as under.
2. The assessee sold certain property during this year for Rs.394.70 The assessee claimed indexation of cost from financial year 2001- 02 and arrived at capital loss of Rs.48.35 Lacs. The said property was acquired by the assessee under inheritance from her mother by way of settlement deed dated 05.03.2015. The Ld. AO held that the assessee acquired the rights in the property only from the date of settlement and therefore, indexation benefit would be available only from financial year 2014-15. The assessee relied on the ruling of Hon’ble High Court of Madras in CIT vs Saroja Naidu (128 Taxmann.com 127) to support the computations. However, rejecting the same, Ld. AO allowed indexation from financial year 2014-15 and re-computed gains at Rs.210.09 Lacs. The Ld. CIT(A) allowed the claim in terms of cited decision of Hon’ble High Court of Madras. Aggrieved, the revenue is in further appeal before us.
3. We find that the adjudication in the impugned order follows binding judicial precedent of jurisdictional High Court. The revenue could not controvert this position. Therefore, we do not find any fault in the impugned order.
4. The appeal stand dismissed.
Order pronounced on 17th July, 2023.