Income Tax Appeal v. Dated :- 12Th February, 2019

Ladda IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL No. 1715 of 2016.Pr. Commissioner of Income Tax-23..Appellant. Vs Smt. Elsa Silva ..Respondent. Mr. A.R. Malhotra a/with Mr. N.A.Kazi, for the Appellant. CORAM : AKIL KURESHI & B. P. COLABAWALLA, JJ. DATED :- 12TH FEBRUARY, 2019. P.C.: 1.Revenue is in appeal against judgment of Income taxAppellate Tribunal. Following question is presented for ourconsideration:- “Whether on the facts and circumstances of the caseand in law, the ITAT failed to appreciate the fact that Section48 clearly states that the cost inflation index shall be fromthe first year in which the asset was held by the assessee? 2.It is not in dispute that the assessee became theowner of part of the immovable property upon death of hermother by way of succession. Subsequently, she received therest of the share in the property by way of gift from othersuccessors. At the time of sale of the property by therespondent-assessee, the question of computing capital gainarose. The assessee contend that the benefit of indexationshould be granted from the death of her mother i.e.predecessor-in-title of the property, became the owner thereof.This view is supported by a judgment of this Court in the caseof the Commissioner of Income Tax Vs. Manjula J. Shah [2013]355 ITR 474. In the said judgment, it was held and observed asunder :- “We see no merit in the above contention. Asrightly contended by Mr. Rai, learned counsel for theassessee, the indexed cost of acquisition has to bedetermined with reference to the cost inflation indexfor the first year in which the capital asset was “heldby the assessee”. Since the expression “held by theassessee” is not defined under section 48 of the Act,that expression has to be understood as defined undersection 2 of the Act. Explanation 1 (i)(b) to Section2 (42A) of the Act provides that in determining theperiod for which an asset is held by an assesseeunder a gift, the period for which the said asset washeld by the previous owner shall be included. As the previous owner held the capital asset from January29, 1993, as per Explanation 1 (i)(b) to Section 2(42A) of the Act, the assesee is deemed to have heldthe capital asset from January, 29, 1993, the assesseeis deemed to have held the asset as a long-terimcapital asset. If the long-term capital gains liabilityhas to be computed under section 48 of the Act bytreating that the assessee held the capital asset fromJanuary, 1993, then, naturally in determining theindexed cost of acquisition under section 48 of theAct, the assessee must be treated to have held theasset from January 29, 1993, and, accordingly thecost inflation index for 1992-93 would be applicablein determining the indexed cost of acquisition.” 3.In fact, the revenue also does not dispute thisposition. This appeal was probably filed in view of the fact thatthe revenue had not accepted the judgment of this Court in caseof CIT v. Manjula J. Shah and carried appeal before the SupremeCourt. We are informed that such an appeal is dismissed on theground of low tax effect. Be that as it may, insofar as thisCourt is concerned, the issue is covered against the revenue.Income-tax appeal is dismissed with no order as to costs. (B.P. COLABAWALLA, J.) (AKIL KURESHI, J)