2009 (7) TMI 848 - AT - Income Tax

Capital gain - Income-tax Officer has erred in taking the date of acquisition as 6-1-1992 as against 27-12-1990 declared by the appellant in respect of original cost of acquisition of Rs. 63,59,980 and thereby taking indexation total acquisition cost with effect from 6-1-1992 which is the date of improvement - property is purchased by way of agreement dated 27-12-1990 and the assessee has obtained the certificate under section 269UL(3) as early as 13-2-1991 - It cannot be stated that only after vacating the tenant the assessee got possession because the assessee is the owner of the property with effect from 27-12-1990, but is in the adverse possession of a tenant which was subsequently got vacated - Since the assessee is deemed to be holding the property with effect from 27-12-1990 as owner, claim of indexation from that date is correct Appeal allowed

Summary

The Appellate Tribunal ITAT, Mumbai, in the citation 2009 (7) TMI 848 - ITAT, Mumbai, heard an appeal by the assessee against the order of the CIT(A) XIII, Mumbai dated 31-3-2008 for Assessment year 2004-05. The assessee raised two grounds related to the date of acquisition and index cost of assets sold. The dispute centered around the date from which indexation should be calculated for the sale of a flat in Mumbai. The Assessing Officer and CIT(A) considered the physical possession date as the starting point for indexation, but the Tribunal disagreed. The Tribunal held that the term 'held' in the Explanation to section 48 refers to ownership rights, not just physical possession. By referring to a case law from the Hon'ble Punjab & Haryana High Court, the Tribunal concluded that the assessee was holding the property rights from 27-12-1990, entitling her to indexation from that date. The Tribunal also allowed the amount paid to vacate the tenant as a cost of improvement. The Tribunal overruled the CIT(A)'s reliance on a different case law and directed the Assessing Officer to allow indexation as claimed by the assessee. Consequently, the appeal was allowed in favor of the assessee.