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Harishkumar Babulal Shah Versus ITO

2015 (4) TMI 47 - ITAT AHMEDABAD

Computation of taxable Long Term Capital Gain of HUF - Lower Authorities taking sale consideration in the hands of the assessee at ₹ 13,33,333/- when in fact the Sale Deed specifically mentions that he gets the sale consideration of ₹ 4,00,000/- only, and therefore, the calculation of the taxable capital gain of ₹ 11,71,597/- which is far much more than the actual sale consideration of ₹ 4,00,000/- is patently bad in law - whether the Revenue Authorities were correct in a .....

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where the capital asset became the property of the Assessee by succession or inheritance then the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property had acquired it. In this case, the Assessee, Sri Harish Babulal had acquired this property by inheritance on death of his father Sri Babulal Popatlal who expired on 19th December, 1961. We, therefore, hereby hold that if the dates are correct than the index cost of acquisition is required to .....

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death of the father of the Assessee. If it is found to be prior to 1.4.1981 then naturally the year of inheritance shall be held as 1.4.1981 for the purpose of fixation of cost indexation. With these remarks this issue raised is restored back for denovo adjudication. - Decided in favour of assessee for statistical purpose

Cost of acquisition - Held that:- Assessee got his share in the property after the death of his father and later on after the death of Rohit Babulal his already exis .....

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e value in the formula of cost inflation index. Since certain facts are yet to be determined as discussed by us therefore, the additional ground of assessee also allowed for the statistical purpose. - ITA No.1607/Ahd/2013 - Dated:- 25-3-2015 - Shri Mukul Kr. Shrawat And Shri Anil Chaturvedi JJ. For the Appellant : Shri Roop Chand, Sr.D.R For the Respondent : Shri J.P. Shah, A.R. ORDER Per: Mukul Kumar Shrawat, JUDICIAL MEMBER This is an Appeal filed by the Assessee arising from the order of lear .....

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tal gain of HUF instead of taking index price as on 01.04.1981 as worked out in statement of income of HUF enclosed and taken cost price as of Accounting Year 2003-04 and calculated index accordingly. The Income of HUF may be deleted and there is no meaning in applying cost as of Accounting year 2003-04 as HUF Income is added is to be deleted. 1.1 Later on, the Appellant has also raised an additional ground as under: Without prejudice to the above three grounds, in any case, the Lower Authoritie .....

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hat considering the additional ground now raised and ground no.3 being dependent upon the additional ground. The grounds no.1 and 2 are not pressed. 3. Facts in brief as emerged from the corresponding assessment order passed u/s.143(3) dated 21.12.2011 were that the Assessee in individual capacity has filed a return of income at ₹ 1,82,280/-, however the assessment was completed on the assessed income of ₹ 12,84,474/- after making an addition of ₹ 11,71,597/- as Long Term Capit .....

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cost of acquisition to be considered as 463 instead of 100 as shown by the Assessee. The AO has cited the provision of Section 49 to be read with Section 48 Explanation (iii) of IT Act. A show cause was issued as to why the capital gain to be taxed in the hands of the Assessee after taking cost of acquisition at 463. 3.2 The Assessee s reply was that only 1/6th share of Babulal was acquired by him. A family tree was furnished by the Assessee. It was also clarified that inadvertently PAN card of .....

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arefully considered. However, the same is not acceptable; the property in question has been registered with sub-registrar individual capacity. The P.A. Number mentioned in the sale deed is of individual. It is admitted by the assessee vide letter dtd 07/10/2011 that the sale price of his share has been credited Individual bank account with Dena Bank and not in the bank account in the name of HUF. The valuation report furnished in respect of the property for the valuation as on 01/04/1981 from M. .....

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he said return is to be treated as non-est as the same has not been furnished within the stipulated time provided u/s 139 of the IT Act and hence no cognizance of the said return is to be taken. All this sequence of events proved that the property belongs to assessee s Individual and therefore long term capital gain arising out of the sale of the above property is to be taxed in the hands of Individual. As per family tree furnished by the assessee, the assessee is having only 1/6th share receive .....

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et was held by the assessee or [ for the year beginning on the 1st day of April, 1981, whichever is later. 3.4 In the instant case, 1/6th undivided share in the property in question was first held by the assessee on 19/02/2004 on the death of Rohitkumar Babulal. As such the index cost of inquisition is to be taken at to 463 which is being notified by the Central Govt. for every year under clause-(v) of the Explanation to Section 48 of the Act as against 100 shown by the assessee. 3.5 Further, pl .....

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the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later". This clearly given the formulae by which the indexed cost of Acquisition of any property needs to be compute in the hands of the assessee. 3.7 Here the definition of indexed of acquisition is being exhaustive, and the same cannot be further stretched to suit needs of any particulars assessee. Had the intention of legislature was not to use these words spe .....

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indexation. Considering the above facts, the long term capital gain is computed as under: Sale consideration as per ₹ 13,33,333/- being 1/6th share in the property Less: index cost of acquisition in respect of 1/6th share in the property (considering cost of indexation for the F.Y.2003-04 (128666.66 1/6th cost X 582/463) = ₹ 1,61,736/- Total capital gain chargeable Rs.11,71,597/- 4. When the matter was carried before the First Appellate Authority, learned CIT(A) has upheld the action .....

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ra-2.1 above, it would be seen that the appellant has not challenged the action of the A O through any ground of appeal and hence no adjudication is required to be made to the controversy. As far as the action of the A O of taxing the amount of money as capital gains in the hands of the appellant is concerned, the same has been found to be a legally correct action. The Id A O has rightly pointed out that the P.A. No. used for the registration of the documents is that of appellant as an individua .....

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seller is Harishkumar Babulal Shah having PANo. AFLPS8310P, Assuming without conceding that there was still some scope for clarity, then the consideration should have gone to the HUFs bank account and not to the appellants bank account which again is not the case, I also find force in the argument of the Id A O that the hypothesis of HUF filing the return on 21-9-2011 and showing the impugned capital gains is merely an afterthought to avoid the incidence of taxation. Assuming that the HUF had ri .....

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ellant is a correct legal action is based upon correct understanding of the facts of the case and the contemporary direct tax statute. Consequently, the action of the A 0 is confirmed and the ground of appeal raised is dismissed. 5. From the side of the Assessee, learned AR, Mr. J.P. Shah appeared and pleaded that his first plank of argument revolves around the question raised in the additional ground . He has mentioned that the Assessee has acquired the property in question as per the following .....

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on 19.02.2004. The Assessee, Sri Harish Babulal is also blessed by children. So, the argument of the Assessee is that the property was not acquired in the Year 2003 but it was acquired way back after the death of his father hence the cost of acquisition index as on 1.4.1981 was to be applied by the AO. For this legal proposition, he has placed before us today a computation of capital gain as under: Fair market value of the entire property on 01.04.1981 according to the Valuation Report of regis .....

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Parikh, learned advocate appearing on behalf of the Revenue and considering the material on record and the impugned order passed by the learned ITAT as well as the order passed by the CIT(Appeals), the question which is posed for consideration is whether for considering the long term capital gain "Cost Inflation Index" is required to be considered at the date on which the property was inherited in the name of the assessee or as per the previous cost of acquisition at which previous own .....

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e year in which the assessee became the owner of the asset. In the aforesaid decisions, it was a case of gift. However, same analogy would be applied with respect to the property of inheritance. 8. In view of the above, no error has been committed by the learned ITAT in dismissing the appeal preferred by the Revenue and confirming the order passed by CIT(Appeals) allowing the indexed cost of acquisition from the base year ie., from 1.4.1981 and thereby deleting the addition of ₹ 1,00,76,87 .....

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led to examine the said valuation report. 6. From the side of the Revenue-Department, learned Sr.D.R., Mr. Roop Chand appeared and vehemently objected that the indexation is to be applied as on 1.4.1981. Because the property in question devolved to the share of the Assessee only when Sri Rohit Babulal expired on 19th of February, 2004. The date of acquisition of an asset should be the date on which the Assessee has obtained a legal enforceable right over the property. Even the conduct of the Ass .....

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y the Assessee was not the only seller of the property but the property in question was sold jointly by all the members of the family. The property in question was sold for a consideration of ₹ 80 lac. 8. It is worth to mention at this stage that although we have found that the property in question was inherited by the Assessee but we are not going to disturb the status under which the assessment was completed. The assessment order was passed by the AO in the status of individual which is .....

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Sri Rohit Kumar Babulal on 19th February, 2004 and thereafter he has held that the cost of acquisition would be considered for F.Y.2003-04 on 463 in terms of the provision of Section 49 r.w.s. 48(iii) of IT Act. Section 48 Explanation (iii) of IT Act prescribes that the index cost of acquisition means an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in .....

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see as well as the AO both have adopted this figure at 582. The dispute is that whether the cost inflation index is to be adopted as prescribed for 1.4.1981 which is 100 or as on F.Y.2003-04 which is 463. Although, it is not required to mention being known to everyone that if the denominator is higher than the resultant figure is lower and if the denominator is lower than the resultant figure is higher. The resultant figure is prescribed to be reduced from the sale consideration. To resolve the .....

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essee, Sri Harish Babulal had acquired this property by inheritance on death of his father Sri Babulal Popatlal who expired on 19th December, 1961. We, therefore, hereby hold that if the dates are correct than the index cost of acquisition is required to be adopted as on 1.4.1981, i.e., 100 instead of 463 as alleged by the AO. Since, the family tree was not disclosed in the assessment order therefore, at this stage of second appeal it is not clear that whether the dates as mentioned were verifie .....

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o.3 of ground of appeals is restored back for denovo adjudication. This ground may be treated as allowed but for statistical purpose only. 9.1 An another issue has been raised through additional ground which pertains to the cost of acquisition. The cost on one hand, as AO had adopted at the figure of ₹ 1,28,666/-; but on the other hand the Assessee had adopted ₹ 7,48,833/-. As far as the claim of Assessee is concerned, reliance was placed on a valuation report of M.C. Dalal and Compa .....

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