Commissioner of Income-tax-16 v. Smt. Nita Kamlesh Tanna

JUDGMENT

1. In this appeal, at the instance of Revenue, from the order dated 29 January 2013 of the Income Tax Appellate Tribunal (Tribunal), the following questions have been proposed as substantial questions of law:

2. In the impugned order dated 29 January 2013 relating to the assessment year 200708, the Tribunal has noted the following facts and held in favour of the assessee and against the revenue:

"5. ... It is not in dispute that Late Shri Bhagwandas Purshottam Makhecha acquired the property under consideration on 30th June, 1979, which was in turn gifted to his wife on 15.02.1995 and ultimately devolved upon the assessee herein on expiry of her mother on 26th May, 2006. Since the property was acquired prior to 01.04.1981, in the light of the aforementioned decision, the cost of acquisition as on 01.04.1981 has to be taken into consideration. Since the view taken by the learned CIT(A) is in conformity with the decision rendered by the Hon'ble Bombay High Court , we do not find any infirmity in the order passed by the learned CIT(A) and hence the appeal filed by the Revenue is dismissed."

3. At the hearing of the appeal, our attention has been invited to the decision of this Court in Commissioner Of Income-Tax v. Manjula J. Shah [2013] 355 ITR 474/[2012] 204 Taxman 691/[2011] 16 taxmann.com 42 wherein this Court while considering the similar questions held as under:

"(17) We see no merit in the above contention. As rightly contended by Mr. Rai, learned counsel for the assessee, the indexed cost of acquisition has to be determined with reference to the cost inflation index for the first year in which the capital asset was 'held by the assessee'. Since the expression 'held by the assessee' is not defined under Section 48 of the Act, that expression has to be understood as defined under Section 2 of the Act. Explanation 1(i)(b) to section 2(42A) of the Act provides that in determining the period for which an asset is held by an assessee under a gift, the period for which the said asset was held by the previous owner shall be included. As the previous owner held the capital asset from 29/1/1993, as per Explanation 1(i)(b) to section 2(42A) of the Act, the assessee is deemed to have held the capital asset from 29/1/1993. By reason of the deemed holding of the asset from 29/1/1993, the assessee is deemed to have held the asset as a long term capital asset. If the long term capital gains liability has to be computed under Section 48 of the Act by treating that the assessee held the capital asset from 29/1/1993, then, naturally in determining the indexed cost of acquisition under Section 48 of the Act, the assessee must be treated to have held the asset from 29/1/1993 and accordingly the cost inflation index for 199293 would be applicable in determining the indexed cost of acquisition.

(19) It is true that the words of a statute are to be understood in their natural and ordinary sense unless the object of the statute suggests to the contrary. Thus, in construing the words 'asset was held by the assessee' in clause (iii) of Explanation to Section 48 of the Act, one has to see the object with which the said words are used in the statute. If one reads Explanation 1(i)(b) to section 2(42A) together with Section 48 and 49 of the Act, it becomes absolutely clear that the object of the statute is not merely to tax the capital gains arising on transfer of a capital asset acquired by an assessee by incurring the cost of acquisition, but also to tax the gains arising on transfer of a capital asset inter alia acquired by an assessee under a gift or will as provided under Section 49 of the Act where the assessee is deemed to have incurred the cost of acquisition. Therefore, if the object of the legislature is to tax the gains arising on transfer of a capital acquired under a gift or will by including the period for which the said asset was held by the previous owner in determining the period for which the said asset was held by the assessee, then that object cannot be defeated by excluding the period for which the said asset was held by the previous owner while determining the indexed cost of acquisition of that asset to the assessee. In other words, in the absence of any indication in clause (iii) of the Explanation to Section 48 of the Act that the words 'asset was held by the assessee' has to be construed differently, the said words should be construed in accordance with the object of the statute, that is, in the manner set out in Explanation 1(i)(b) to section 2(42A) of the Act."

4. The impugned order of the Tribunal has, while dismissing the revenue's appeal, merely followed the decision of this Court in Manjula J. Shah (supra). The counsel for the revenue is not able to point out any distinguishing features in this case which would require not following the binding decision of this court in Manjula J. Shah (supra).

5. In view of the above decision, we do not find any substantial question of law arising from the impugned order of the Tribunal giving rise to this appeal. We, therefore, decline to entertain this appeal.

6. Accordingly the appeal is dismissed with no order as to costs.

RITESH