Can we take the benefit of SB ruling

Tax queries 563 views 5 replies

Jagdish Bhalia

Practicing CA

453 Points Joined January 2009

In case of gifted Assets, indexation benefit is available from the year of acquisition of the previous owner

recent ruling of the Special Bench (SB) of the Mumbai Income Tax Appellate Tribunal (ITAT) [ITA No. 7315/Mum/2007] in the case of DCIT vs. Manjula Shah (Taxpayer) which held that, in the case of gifted capital asset, indexation benefit is available to a donee from the year of its acquisition by the previous owner. The SB adopted a purposive construction of the definition of ‘Indexed Cost of Acquisition’ (ICOA) by looking at the scheme of the Indian Tax Law (ITL), which seeks to grant the benefit of cost and holding period of the previous owner to the donee.

I have filed my client return by applying the indexation of the year in which the capital asset was held by the taxpayer.

Can we take benifit of this ruling by filing the rectification application u/s 154.

Replies (5)

C.Balaji

Learner

1867 Points Joined October 2008

Yes..... incase of gifted asset/will/inheritance - indexation is available from the year in which the asset was acquired by the previous owner...

CA Dhiraj Ramchandani

CA M. com

10823 Points Joined November 2008

Yes, u can....

I mean as such the answer for 154 is subjective, depends on situation...

In ur case, you can file the same

Amir

Learner

4016 Points Joined December 2009

Dear Jagdish sir,

If time limit for revision has not lapsed, then u can simply revise ur return..

If revised return has become time barred then u can move an application u/s 154.............But my doubt comes can u push AO to make the changes.........becos Sec 154 says Income Tax Authority "MAY" ammend..........So have some doubt on this..........

But atleast try to pusue him..........

CA Pranjal Joshi

331 Points Joined May 2008

Hi,

I agree with what Amir Sir said. Best way is to revise the return if time has not elapsed.

As far as, Rectification u/s 154 is concerned I personally has doubts in my mind as to whether the situation that you are stating will fall within the ambit of "mistake apperant from the record" to get covered by section 154.

However, in this case the judgement of Mepco Industries Ltd. Vs. CIT - 2009 TIOL 121 SC IT LB may be relevant to decide whether it is mistake apperent from record or not.

CA Karun Gupta

Practicing Chartered Accountant

312 Points Joined March 2007

Hi,

I'd like to add that an application can be moved u/s 154 for this case, and the benefit of the ruling can be availed through this section. Mistake apparent from record is something about which no two views are possible. And judgements can be used to move applications u/s 154.