Hi all
Suppose a transfer of a Capital Asset takes place by way of will from
Mr.X to Mr.Y in FY 2002-03. X had purchase it originally in FY 1995-
96. Mr.Y sells it in FY 2005-06. Can Mr.Y get the benefit of
indexation from FY 1995-96 or it will be from FY 2002-03.
Two Contradicting judgments
Pushpa Sofat 81 ITD 1 Chandigarh ITAT Assessee Favouring
Kishore Kanugo 290 ITR 298 Mumbai ITAT Revenue Favouring
Explantion to Section 48 says that it will be from the first year held
by the Assessee. Literally it means from FY 2002-03. However the
legislature has provided that the holding perid should include that of
the previous owner also.
The Mumbai ITAT judgment defeats the very purpose of the Indexation
i.e. to counter the effects of Indexation.
Law should be interpretated in such a way that it makes a clause
meaningful and not meaningless.
very narrow interpretation in 290 ITR >:(
Thanks for bringing attention. I was not aware of controversy. I agree Mumbai bench judgement is too narrow and incorrect.
It seems that there is an unreported judgment of the Mumbai ITAT in the case of Meena Khera on this issue which is favourable to the assessee.
does anybody please have a bare copy of the case?
I think the issue is clear from the s. 2(42A) where the period of holding is deemed to include the the period of the previous owner. The same interpretation also follows for proviso to s., 48. The decision of Mumbai ITAT seems incorrect. I think there is a decision of Mumbai SMC bench on the issue in Raksha Turakhia's case delivered. But, the issue is not discussed at length in that case. Yet, may have some pursuasive value,
There are few other judgements also on this issue favouring the assessee by the ITAT Mumbai
Smt. Meena Khera in ITA No.5258/Mum/1998
Ms. Vidhi Indubhushan Obhan ITA No. 5165/Mum/2005 SMC Bench
Smt. Jayshree I. Obhan ITA No. 1387/Mum/2005 "D" Bench
Lst two case has been represented by myself and copies of the these t two judgements can be collected form my office. In the case of Jaysheee obhan the ITAT make in clear when the assessee acquired by property not by purchase or not by ostensible transfere but through operation of law the assessee should get the benefit of indexation from the day when the original owner acquired the property.
The issue is whether there is a transfer thorugh a will or partition. There is no transfer when a bequeathal is made nor when a partition happens. It is only assertion of a preexisting right.
Mumbai ITAT matter is quite different from the facts mentioned in your question.
In a Will, the asset bequethed will devolve on the person named in the will, and continues the ownership, as the testator cannot hold the property anymore due his death.
In a partition, a new right, title and interest is acquired by the coparcener in his individaul capacity for the first time.
I donot think, you can compare the facts with the mumbai ITAT.290 itr. Not correct.
I have read in an article on the BCAS website that there is also a Calcutta Tribunal decision in the case of Mino Deogan which is favourable to the assessee.