THE issues before the Bench are - Whether earnest money or advance money received on sale of property will qualify for exemption u/s 54EC if the assessee invests such earnest money in specified assets before the date of transfer of the asset; Whether the AO can make an addition on the basis of the Stamp duty valuation; Whether value adopted or assessed by any authority of the State Government for the purpose of payment of stamp duty in respect of land or building cannot be taken as sale consideration received for the purpose of section 48 and Whether for the purpose of section 49(i)(ii), where the capital asset became the property of the assessee under a gift or will the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee. And the verdict partly goes in favour of the assessee.
Assessee is an individual and filed return of income on 31-03-2009 declaring total income of Rs. 8,31,07,890/-. During the course of assessment proceedings the AO noted that the assessee has sold the property at Mukund Nagar on 05-04-2007 for a total consideration of Rs.16 crores. After claiming indexed cost of acquisition at Rs.4,88,09,205/- the assessee has offered an amount of Rs.11,11,90,795/- as Long Term Capital Gain. Further, the assessee has claimed exemption u/s 54F amounting to Rs.1,84,07,799/- by investing the same in the construction of new residential property. The assessee has further claimed exemption of Rs.50 lakhs u/s 54EC by investing the same in Rural Electrification Corporation Ltd. on 02-02-2007.
The AO noted that the assessee has invested the amount of Rs.50 lakhs in Rural Electrification Corporation Ltd. before the date of sale. He, therefore, asked the assessee to explain as to how the exemption is available. Referring to the decision of the Nagpur Bench of the Tribunal in the case of Bhikulal Chandak HUF Vs. ITO and CBDT Circular No.359 dated 10-05-2003 36 CTR (TLT) 1 it was submitted that the assessee has correctly claimed the deduction. However, the AO was not convinced with the explanation given by the assessee. He noted that the CBDT Circular refers to exemption u/s 54E whereas the claim of the assessee is u/s 54EC. Rejecting the arguments advanced by the assessee and distinguishing the decision cited before him, the AO disallowed the claim of deduction u/s 54EC(1) amounting to Rs.50 lakhs.
So far as the claim of deduction u/s 54F by the assessee amounting to Rs.1,84,07,799/- is concerned the AO noted that the same is on the basis of a certificate from an architect towards construction of new residential property. From the details furnished by the assessee he noted that the assessee could not furnish either the completion certificate or approved plan. Therefore, he was of the opinion that there is no authenticated document to show the actual construction in the residential property. The AO, therefore, asked the assessee to produce the architect who has issued the certificate. However, the assessee did not produce the architect. The AO noted from the various details furnished by the assessee that the assessee has spent an amount of Rs.2,62,96,856/- for construction of new property consisting of residential and commercial property being factory shed. He asked the assessee to give the bifurcation of the cost incurred. The assessee filed the certificate issued by the architect M/s. Deshpande Degaonkar dated 07-04-2008 wherein he has stated that the total cost for the residential property is Rs.1,84,89,057/-. The AO noted that the bifurcation of the total area of the construction was not given. He therefore asked the assessee to submit the bills/vouchers to prove the expenditure claimed. The assessee initially furnished bills amounting to Rs.1,90,65,224/- and subsequently submitted further bills amounting to Rs.38,57,443/-. Thus the total of the bills produced before the AO was Rs.2,29,22,667/-. The AO noted that all the bills are raised in the name of “M/s. The Southern Machine Industries”. Even the assessee has also submitted the ledger extracts of the respective parties as appearing in the books of M/s. The Southern Machine Industries. He noted that the said firm is a partnership firm wherein the assessee and his wife are partners. The firm is running business of manufacturing mechanical equipments from the factory shed which has composite structure along with the so-called residential property. He noted that the bills produced for Rs.2.29 Crores include the total payments for labour charges at Rs.85,01,375/- which are paid in cash on various dates. The vouchers are self made vouchers drawn by M/s. The Southern Machine Industries. The percentage of such labour charges to the total bills works out to 37%. Since the amount was incurred in cash the AO was of the opinion that the genuineness of the same cannot be verified. Further, the construction cost includes bills for purchase of computers on 26-04-2008 amounting to Rs.33,000/- and purchase of one DVD writer on 09-04-2008 amounting to Rs.12,050/-. He, therefore, asked the assessee to explain as to why the claim of exemption u/s 54F should not be disallowed. Rejecting the various explanations given by the assessee and in absence of production of the architect before him the AO disallowed the claim of exemption u/s 54F amounting to Rs.1,84,07,779/-.
So far as the calculation of indexed cost of acquisition the AO noted that the property so sold was bequeathed to the assessee as per his father’s will in the year 2003-04. The assessee has valued the property as on 01-04-1981 at Rs.71,18,920/- in respect of land and Rs.17,39,375/- in respect of the building as per the valuation report dated 20-10-2008 and claimed the cost of indexation w.e.f. 01-04-1981. The AO was of the opinion that the valuation report submitted by the assessee is on the higher side. In order to ascertain the value as on 01-04-1981 the AO wrote a letter to the Joint Director, Registrar of Stamps on 10-12-2010. In response to the same the Joint Director, Registrar vide his letter dated 22-12-2010 valued the said property at Rs.40,91,400/-. The AO therefore asked the assessee to explain as to why the valuation of the property as on 01-04-1981 should not be taken at Rs.40,91,400/- in respect of the land. It was explained by the assessee that the evidences collected by the department is towards the valuation for the purpose of ascertaining the stamp duty and recovery matters which is based on circle rates and they adopt uniform rate of property for the entire locality and therefore the same should not be applied. However, the AO was not convinced with the above argument. He observed that the assessee has not furnished any evidence to show that his property was better located. He noted that the valuation furnished by the assessee is on the basis of general valuation prevailing during 01-04-1981. Therefore, the only authenticated valuation according to AO is that of the Registrar of Stamp duty. He therefore adopted the valuation of the property as on 01-04-1981 at Rs.40,91,400/- as against Rs.71,18,920/- taken by the assessee.
The AO further noted that the assessee has claimed indexation w.e.f., 01-04-1981 though the property came into assessee’s hands only during the year 2003-04. He, therefore, asked the assessee to explain as to why for indexation purpose the year of acquisition should not be taken as 2003-04. Rejecting the various explanations given by the assessee and relying on certain decisions the AO held that the provisions of section 55(2)(b)(ii) are very clear and unambiguous. Referring to provisions of section 49(1), Explanation 1(b) to section 2(42A) and provisions of Explanation (iii) to section 48 the AO took the indexation for the F.Y. 2003-04 as the basis and re-determined the cost of indexation at Rs.69,39,000/-. After deducting the same from the sale proceeds of Rs.16 crores the AO determined the capital gain at Rs.15,30,61,000/- as against Rs.11,11,90,795/- offered by the assessee. Thus, he made addition of Rs.4,18,70,205/- being the income from Long Term Capital Gain on account of sale of land. CIT(A) gave part relief to the assessee.
On cross appeals by the assessee and the Revenue, ITAT held that,
++ Ground of appeal No.1 by the assessee relates to addition of Rs.50 lakhs made by the AO by disallowing the claim u/s 54EC and upheld by the CIT(A). it is found that the assessee has invested the said amount in Rural Electrification Corporation Ltd bonds on 02-02-2007. It is the case of the AO that since the property at Mukundnagar was sold on 05-04-2007 for a total consideration of Rs.16 Crores and the assessee has invested prior to the date of the sale, therefore, the assessee is not entitled to the claim. While doing so, he further held that the Circular No.359 dated 10-05-1983 is not applicable to the facts of the present case since the same was in context of section 54E. CIT(A) rejected the claim of the assessee on the ground that there is only one agreement for sale which is dated 05-04-2007 and the assessee neither at the assessment stage nor during the appeal proceedings has brought any evidence or documents on record to indicate that any prior agreement for sale had taken place. Therefore, distinguishing the decision of the Nagpur Bench of the Tribunal he rejected the claim of the assessee;
++ the order of the CIT(A) that there was no agreement prior to date of sale is incorrect in view of the express provision in the sale deed dated 05-04-2007. CBDT vide Circular No.359 (F.No.207/8/82-IT(A-11) dated 10-05-1983 has held that earnest money or advance is a part of the sale consideration and therefore if the assessee invests the earnest money or the advance received in specified assets before the date of transfer of the asset, the amount so invested will qualify for exemption u/s 54E. Although in the instant case the issue is u/s 54EC, however, we find the language in the above section is similar to that of section 54. Therefore, there is a force in the arguments of the Assessee that earnest money or advance money is a part of sale consideration;
++ the Nagpur Bench of the Tribunal in the case of Bhikulal Chandak (HUF) Vs. ITO 126 TTJ 545 has held that assessee cannot be treated as defaulter in making investment in bonds as required u/s 54EC on receipt of advance as per the agreement to sell property and claiming exemption u/s 54EC. Since in the instant case the assessee has invested an amount of Rs.50 lakhs out of the advance money received on the basis of the agreement to sale, therefore, following the spirit of the CBDT Circular No.359 dated 10-05-1983 in the context of section 54E and the ratio of the decision of Nagpur Bench of the Tribunal in the case of Bhikulal Chandak (HUF), we hold that the assessee is entitled to deduction u/s 54EC on account of amount of Rs.50 lakhs. The order of the CIT(A) is accordingly set-aside and the ground raised by the assessee is allowed;
++ So far as the ground pertaining to disallowance of the claim of deduction u/s 54 is concerned, the AO disallowed the same on the ground that (a) there is no approval for building plan and no structural design of the property (b) the assessee has not submitted any document in support of regularisation of the building by PMC (c) the expenses shown are not completely verifiable and (d) the assessee has not produced the architect;
++ the CIT(A) upheld the action of the AO on the ground that the assessee was not able to justify the investment and also the ownership of the residential property. Further, the assessee also was unable to prove that the investment was made before the due date of filing of the return for the relevant year;
++ It is the submission of the Assessee that although the construction was unauthorised, however the same has been regularized in the amnesty scheme and the investment towards construction of the property has been made before the due date of filing of the return u/s 139(4) and that he is in a position to produce the architect and also furnish the details towards the construction of the property. Considering the totality of the facts of the case and in the interest of justice, the issue was restored to the file of the AO with a direction to give one more opportunity to the assessee to substantiate his case by producing the architect before him for his examination;
++ as far as the ground raised by the Revenue against the order of the CIT(A) in accepting the Fair Market Value as on 01-04-1981 at Rs.71,18,920/- adopted by the assessee as against Rs.40,91,400/- determined by the AO, is concerned, it is found that the CIT(A) following the decision of the Delhi Bench of the Tribunal in the case of Ravikant Vs. ITO reported in 110 TTJ 297 and various other decisions held that the addition made by the AO on the basis of the Stamp duty valuation is not correct. While doing so, he further held that the architect had given clarification for the valuation which was completely ignored by the AO. Further, the valuation has been based on sale instances of the nearby area which appears to be reasonable in confirming the basis for the fair market value. He observed that the Punjab & Haryana High Court in the case of CIT Vs. Chandni Bhocher reported in 323 ITR 510 has held that value adopted or assessed by any authority of the State Government for the purpose of payment of stamp duty in respect of land or building cannot be taken as sale consideration received for the purpose of section 48. The decision of the Tribunal holding that valuation done by any State Agency for the purpose of Stamp duty would not Ipso facto substitute the actual sale consideration as being passed on to the seller by the purchaser in the absence of any admissible evidence and that the AO is obliged to bring on record positive evidence supporting the price assessed by the State Government for the purpose of stamp duty was upheld by the High Court;
++ from the copy of the valuation done by the District Registrar & Stamp Collector we find he has adopted the value of land at Rs.1200/- per square meter as on 01-04-1981 taking the valuation rate of Rs.3,000/- per square meter during 1989. The Registered valuer on the other hand has considered the sale instance in 1985 at Rs.2,721.23 per square meter and considered the rate of Rs.2,276.69 per square meter. The sale instance of 1985 is more closer to valuation in 1981 as against the sale instance of 1989. Considering the totality of the facts of the case, the order of CIT(A) is a reasoned one which requires no interference from our side;
++ as far as the ground raised by the assessee relating to the adoption of cost inflation index as 1981-82 as against F.Y. 1993-94 by the AO is concerned, CIT(A) following the decision of the Special Bench of the Tribunal in the case of DCIT Vs. Manjula J. Shah (2009-TIOL-698-ITAT-MUM-SB) held that the cost inflation index and the indexed cost of acquisition has to be worked out by taking the date of acquisition by the previous owner in respect of the property received by the assessee from his father by way of a will;
++ as per the provisions of section 49(i)(ii) where the capital asset became the property of the assessee under a gift or will the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. The explanation further provides that the expression previous owner of the property in relation to any capital asset owned by an assessee means the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in clause (i) or clause (ii) or clause (iii) or clause (iv) of sub-section (1) of section 49. Since in the instant case the assessee became the owner of the property by way of a will, therefore, the cost of the same shall relate back to the previous owner. Since the previous owner had owned the property prior to 01-04-1981, therefore, the year 1980-81 adopted by the assessee for the purpose of indexation is in consonance with the provisions of the Act. Since the CIT(A) while deciding the issue has referred to various provisions in support of the same, therefore, in absence of any distinguishing features brought before us we find no infirmity in the order of the CIT(A) adopting 1980-81 as the cost inflation index. The grounds raised by the Revenue are accordingly dismissed.
Facts of the case
Assessee is an individual and filed return of income on 31-03-2009 declaring total income of Rs. 8,31,07,890/-. During the course of assessment proceedings the AO noted that the assessee has sold the property at Mukund Nagar on 05-04-2007 for a total consideration of Rs.16 crores. After claiming indexed cost of acquisition at Rs.4,88,09,205/- the assessee has offered an amount of Rs.11,11,90,795/- as Long Term Capital Gain. Further, the assessee has claimed exemption u/s 54F amounting to Rs.1,84,07,799/- by investing the same in the construction of new residential property. The assessee has further claimed exemption of Rs.50 lakhs u/s 54EC by investing the same in Rural Electrification Corporation Ltd. on 02-02-2007.
The AO noted that the assessee has invested the amount of Rs.50 lakhs in Rural Electrification Corporation Ltd. before the date of sale. He, therefore, asked the assessee to explain as to how the exemption is available. Referring to the decision of the Nagpur Bench of the Tribunal in the case of Bhikulal Chandak HUF Vs. ITO and CBDT Circular No.359 dated 10-05-2003 36 CTR (TLT) 1 it was submitted that the assessee has correctly claimed the deduction. However, the AO was not convinced with the explanation given by the assessee. He noted that the CBDT Circular refers to exemption u/s 54E whereas the claim of the assessee is u/s 54EC. Rejecting the arguments advanced by the assessee and distinguishing the decision cited before him, the AO disallowed the claim of deduction u/s 54EC(1) amounting to Rs.50 lakhs.
So far as the claim of deduction u/s 54F by the assessee amounting to Rs.1,84,07,799/- is concerned the AO noted that the same is on the basis of a certificate from an architect towards construction of new residential property. From the details furnished by the assessee he noted that the assessee could not furnish either the completion certificate or approved plan. Therefore, he was of the opinion that there is no authenticated document to show the actual construction in the residential property. The AO, therefore, asked the assessee to produce the architect who has issued the certificate. However, the assessee did not produce the architect. The AO noted from the various details furnished by the assessee that the assessee has spent an amount of Rs.2,62,96,856/- for construction of new property consisting of residential and commercial property being factory shed. He asked the assessee to give the bifurcation of the cost incurred. The assessee filed the certificate issued by the architect M/s. Deshpande Degaonkar dated 07-04-2008 wherein he has stated that the total cost for the residential property is Rs.1,84,89,057/-. The AO noted that the bifurcation of the total area of the construction was not given. He therefore asked the assessee to submit the bills/vouchers to prove the expenditure claimed. The assessee initially furnished bills amounting to Rs.1,90,65,224/- and subsequently submitted further bills amounting to Rs.38,57,443/-. Thus the total of the bills produced before the AO was Rs.2,29,22,667/-. The AO noted that all the bills are raised in the name of “M/s. The Southern Machine Industries”. Even the assessee has also submitted the ledger extracts of the respective parties as appearing in the books of M/s. The Southern Machine Industries. He noted that the said firm is a partnership firm wherein the assessee and his wife are partners. The firm is running business of manufacturing mechanical equipments from the factory shed which has composite structure along with the so-called residential property. He noted that the bills produced for Rs.2.29 Crores include the total payments for labour charges at Rs.85,01,375/- which are paid in cash on various dates. The vouchers are self made vouchers drawn by M/s. The Southern Machine Industries. The percentage of such labour charges to the total bills works out to 37%. Since the amount was incurred in cash the AO was of the opinion that the genuineness of the same cannot be verified. Further, the construction cost includes bills for purchase of computers on 26-04-2008 amounting to Rs.33,000/- and purchase of one DVD writer on 09-04-2008 amounting to Rs.12,050/-. He, therefore, asked the assessee to explain as to why the claim of exemption u/s 54F should not be disallowed. Rejecting the various explanations given by the assessee and in absence of production of the architect before him the AO disallowed the claim of exemption u/s 54F amounting to Rs.1,84,07,779/-.
So far as the calculation of indexed cost of acquisition the AO noted that the property so sold was bequeathed to the assessee as per his father’s will in the year 2003-04. The assessee has valued the property as on 01-04-1981 at Rs.71,18,920/- in respect of land and Rs.17,39,375/- in respect of the building as per the valuation report dated 20-10-2008 and claimed the cost of indexation w.e.f. 01-04-1981. The AO was of the opinion that the valuation report submitted by the assessee is on the higher side. In order to ascertain the value as on 01-04-1981 the AO wrote a letter to the Joint Director, Registrar of Stamps on 10-12-2010. In response to the same the Joint Director, Registrar vide his letter dated 22-12-2010 valued the said property at Rs.40,91,400/-. The AO therefore asked the assessee to explain as to why the valuation of the property as on 01-04-1981 should not be taken at Rs.40,91,400/- in respect of the land. It was explained by the assessee that the evidences collected by the department is towards the valuation for the purpose of ascertaining the stamp duty and recovery matters which is based on circle rates and they adopt uniform rate of property for the entire locality and therefore the same should not be applied. However, the AO was not convinced with the above argument. He observed that the assessee has not furnished any evidence to show that his property was better located. He noted that the valuation furnished by the assessee is on the basis of general valuation prevailing during 01-04-1981. Therefore, the only authenticated valuation according to AO is that of the Registrar of Stamp duty. He therefore adopted the valuation of the property as on 01-04-1981 at Rs.40,91,400/- as against Rs.71,18,920/- taken by the assessee.
The AO further noted that the assessee has claimed indexation w.e.f., 01-04-1981 though the property came into assessee’s hands only during the year 2003-04. He, therefore, asked the assessee to explain as to why for indexation purpose the year of acquisition should not be taken as 2003-04. Rejecting the various explanations given by the assessee and relying on certain decisions the AO held that the provisions of section 55(2)(b)(ii) are very clear and unambiguous. Referring to provisions of section 49(1), Explanation 1(b) to section 2(42A) and provisions of Explanation (iii) to section 48 the AO took the indexation for the F.Y. 2003-04 as the basis and re-determined the cost of indexation at Rs.69,39,000/-. After deducting the same from the sale proceeds of Rs.16 crores the AO determined the capital gain at Rs.15,30,61,000/- as against Rs.11,11,90,795/- offered by the assessee. Thus, he made addition of Rs.4,18,70,205/- being the income from Long Term Capital Gain on account of sale of land. CIT(A) gave part relief to the assessee.
On cross appeals by the assessee and the Revenue, ITAT held that,
++ Ground of appeal No.1 by the assessee relates to addition of Rs.50 lakhs made by the AO by disallowing the claim u/s 54EC and upheld by the CIT(A). it is found that the assessee has invested the said amount in Rural Electrification Corporation Ltd bonds on 02-02-2007. It is the case of the AO that since the property at Mukundnagar was sold on 05-04-2007 for a total consideration of Rs.16 Crores and the assessee has invested prior to the date of the sale, therefore, the assessee is not entitled to the claim. While doing so, he further held that the Circular No.359 dated 10-05-1983 is not applicable to the facts of the present case since the same was in context of section 54E. CIT(A) rejected the claim of the assessee on the ground that there is only one agreement for sale which is dated 05-04-2007 and the assessee neither at the assessment stage nor during the appeal proceedings has brought any evidence or documents on record to indicate that any prior agreement for sale had taken place. Therefore, distinguishing the decision of the Nagpur Bench of the Tribunal he rejected the claim of the assessee;
++ the order of the CIT(A) that there was no agreement prior to date of sale is incorrect in view of the express provision in the sale deed dated 05-04-2007. CBDT vide Circular No.359 (F.No.207/8/82-IT(A-11) dated 10-05-1983 has held that earnest money or advance is a part of the sale consideration and therefore if the assessee invests the earnest money or the advance received in specified assets before the date of transfer of the asset, the amount so invested will qualify for exemption u/s 54E. Although in the instant case the issue is u/s 54EC, however, we find the language in the above section is similar to that of section 54. Therefore, there is a force in the arguments of the Assessee that earnest money or advance money is a part of sale consideration;
++ the Nagpur Bench of the Tribunal in the case of Bhikulal Chandak (HUF) Vs. ITO 126 TTJ 545 has held that assessee cannot be treated as defaulter in making investment in bonds as required u/s 54EC on receipt of advance as per the agreement to sell property and claiming exemption u/s 54EC. Since in the instant case the assessee has invested an amount of Rs.50 lakhs out of the advance money received on the basis of the agreement to sale, therefore, following the spirit of the CBDT Circular No.359 dated 10-05-1983 in the context of section 54E and the ratio of the decision of Nagpur Bench of the Tribunal in the case of Bhikulal Chandak (HUF), we hold that the assessee is entitled to deduction u/s 54EC on account of amount of Rs.50 lakhs. The order of the CIT(A) is accordingly set-aside and the ground raised by the assessee is allowed;
++ So far as the ground pertaining to disallowance of the claim of deduction u/s 54 is concerned, the AO disallowed the same on the ground that (a) there is no approval for building plan and no structural design of the property (b) the assessee has not submitted any document in support of regularisation of the building by PMC (c) the expenses shown are not completely verifiable and (d) the assessee has not produced the architect;
++ the CIT(A) upheld the action of the AO on the ground that the assessee was not able to justify the investment and also the ownership of the residential property. Further, the assessee also was unable to prove that the investment was made before the due date of filing of the return for the relevant year;
++ It is the submission of the Assessee that although the construction was unauthorised, however the same has been regularized in the amnesty scheme and the investment towards construction of the property has been made before the due date of filing of the return u/s 139(4) and that he is in a position to produce the architect and also furnish the details towards the construction of the property. Considering the totality of the facts of the case and in the interest of justice, the issue was restored to the file of the AO with a direction to give one more opportunity to the assessee to substantiate his case by producing the architect before him for his examination;
++ as far as the ground raised by the Revenue against the order of the CIT(A) in accepting the Fair Market Value as on 01-04-1981 at Rs.71,18,920/- adopted by the assessee as against Rs.40,91,400/- determined by the AO, is concerned, it is found that the CIT(A) following the decision of the Delhi Bench of the Tribunal in the case of Ravikant Vs. ITO reported in 110 TTJ 297 and various other decisions held that the addition made by the AO on the basis of the Stamp duty valuation is not correct. While doing so, he further held that the architect had given clarification for the valuation which was completely ignored by the AO. Further, the valuation has been based on sale instances of the nearby area which appears to be reasonable in confirming the basis for the fair market value. He observed that the Punjab & Haryana High Court in the case of CIT Vs. Chandni Bhocher reported in 323 ITR 510 has held that value adopted or assessed by any authority of the State Government for the purpose of payment of stamp duty in respect of land or building cannot be taken as sale consideration received for the purpose of section 48. The decision of the Tribunal holding that valuation done by any State Agency for the purpose of Stamp duty would not Ipso facto substitute the actual sale consideration as being passed on to the seller by the purchaser in the absence of any admissible evidence and that the AO is obliged to bring on record positive evidence supporting the price assessed by the State Government for the purpose of stamp duty was upheld by the High Court;
++ from the copy of the valuation done by the District Registrar & Stamp Collector we find he has adopted the value of land at Rs.1200/- per square meter as on 01-04-1981 taking the valuation rate of Rs.3,000/- per square meter during 1989. The Registered valuer on the other hand has considered the sale instance in 1985 at Rs.2,721.23 per square meter and considered the rate of Rs.2,276.69 per square meter. The sale instance of 1985 is more closer to valuation in 1981 as against the sale instance of 1989. Considering the totality of the facts of the case, the order of CIT(A) is a reasoned one which requires no interference from our side;
++ as far as the ground raised by the assessee relating to the adoption of cost inflation index as 1981-82 as against F.Y. 1993-94 by the AO is concerned, CIT(A) following the decision of the Special Bench of the Tribunal in the case of DCIT Vs. Manjula J. Shah (2009-TIOL-698-ITAT-MUM-SB) held that the cost inflation index and the indexed cost of acquisition has to be worked out by taking the date of acquisition by the previous owner in respect of the property received by the assessee from his father by way of a will;
++ as per the provisions of section 49(i)(ii) where the capital asset became the property of the assessee under a gift or will the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be. The explanation further provides that the expression previous owner of the property in relation to any capital asset owned by an assessee means the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in clause (i) or clause (ii) or clause (iii) or clause (iv) of sub-section (1) of section 49. Since in the instant case the assessee became the owner of the property by way of a will, therefore, the cost of the same shall relate back to the previous owner. Since the previous owner had owned the property prior to 01-04-1981, therefore, the year 1980-81 adopted by the assessee for the purpose of indexation is in consonance with the provisions of the Act. Since the CIT(A) while deciding the issue has referred to various provisions in support of the same, therefore, in absence of any distinguishing features brought before us we find no infirmity in the order of the CIT(A) adopting 1980-81 as the cost inflation index. The grounds raised by the Revenue are accordingly dismissed.
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