IN THE INCOME TAX APPELLATE TRIBUNAL
BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER
AND
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
ITA No.2976/Del/2011
Assessment Year : 2006-07
Deputy Director of Income Tax,
Circle 2(2),
(Appellant)
Vs.
Ms Banita Sawhney,
C/o Suresh Sethi & Co., CA’s,
42, GF, World Trade Centre,
PAN : BHXPS6829N
(Respondent)
Assessee by: Shri R. Singh, Advocate
Revenue by: Shri N.K. Chand, Sr.DR
ORDER
PER I.P. BANSAL, JUDICIAL MEMBER
This is an appeal filed by the revenue. It is directed against the order passed by the CIT (A) dated
1. On the facts and circumstances of the case, learned CIT (A) has erred in holding that base year for calculating indexed cost of acquisition would be 1981-82.
2. On the facts and circumstances of the case, learned CIT (A) has erred in not appreciating that first year in which asset was held the assessee was the first year in which it was inherited by the assessee.
3. The appellant prays for leave to add, amend, modify or alter any grounds of appeal at the time or before the hearing of appeal.”
2. The assessee had inherited property on the death of her father on
|
Company
|
Paid up share
capital
|
Book value of
building appearing
in Balance Sheet
(Rs.)
|
Market value
of building as
on 1.04.1981. |
|
Sawhney
Investments Private
Limited
|
5,00,000.00 |
5,16,821.10 |
11,36,720.00 |
|
Baba Properties
Private Limited
|
2,50,000.00 |
2,37,656.00 |
5,24,640.00 |
|
H.S. Investments
Private Limited
|
2,50,000.00 |
2,37,656.00 |
5,24,640.00 |
|
Total |
10,00,000.00 |
9,92,133.10 |
21,86,000.00 |
3. 50% of the equity shareholding of the above companies belonged to the assessee along with Shri Harpreet Sawhney, Shri Harmeet Sawhney and Mrs. Pratiba Sawhney and was sold for a consideration of ` 2,73,75,000/-. Long term capital gain was worked out by the assessee as under:-
|
PARTICULARS |
AMOUNT (RS.) |
|
|
68,43,750.00 |
|
Less: Cost of Acquisition
Fair Market Value as on 01.04.1981 =
2,73,250.00 (As per valuation report –
Rs.21,86,000* 1/8th share)
Indexed Cost of Acquisition
= Rs.2,73,250*497/100
|
(13,58,053.00) |
|
Total Long term Capital gain 54,85,697.00 |
|
4. The Assessing Officer did not agree with the version of the assessee and has adopted the cost index with effect from financial year 2001-02 when the aforementioned shares fell on the assessee on the death of her father. By taking the cost indexation from financial year 2001-02, the Assessing Officer made an addition of ` 10,39,259/- to the income of the assessee. Learned CIT (A) has decided the issue in favour of the assessee on the basis of various decisions rendered by the Tribunal in which it has been held that the base year for calculation of index cost of acquisition of the shares 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) should be
taken as financial year 1981-82 when such shares were acquired by the previous owner prior to
5. The learned DR relied upon the order of Assessing Officer. As against that the learned AR of the assessee has produced before us copy of the aforementioned Special Bench decision and it was contended that the issue is covered in favour of the assessee.
6. We have heard both the parties and we find that the learned CIT (A) while deciding the issue in favour of the assessee has relied upon the aforementioned decision of the Special Bench in which it has been stated that in case of inheritance, if the assets were acquired by the previous owner before 1st April, 1981, then, cost index should be based on the index of financial year 1981-82. Therefore, after hearing both the parties, we find no substance in the departmental appeal and the same is dismissed.
7. In the result, the appeal is dismissed.
The order pronounced in the open court on 19.12.2011.
Sd/- Sd/-
[SHAMIM YAHYA] [I.P. BANSAL]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated, 19.12.2011.
dk
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY
By Order,
Deputy Registrar,
ITAT,
