2019 (5) TMI 1772 - AT - Income Tax

Revenue's Appeal Dismissed: Indexation Benefits Upheld Despite Pending SLP. Precedent's Binding Force.

The appeal by the revenue challenging the indexed cost of acquisition for LTCG was dismissed. The Ld. CIT(A) upheld the assessee's claim for indexation ... Gain on sale of property as inherited from parents - Benefit of indexation - Year of assessment - Transfer of ownership - property was purchased by the parents of the assessee before 01/04/1981 - CT-A directing the AO that indexed cost of acquisition should be taken from the year in which previous owner acquired the asset i.e. 01.04.1981 and not from the year in which assessee became owner of the asset for purpose of computation of LTCG - HELD THAT:- Although the assessee relied on the judgement of Hon’ble Bombay High Court rendered in Manjula Shah Vs. DCIT, [2011 (10) TMI 406 - BOMBAY HIGH COURT] however, noticing that the Special leave Petition filed by the department against the same was pending before Hon’ble Supreme Court, the benefit as claimed by the assessee was denied by Ld. AO. The Ld. First appellate authority reversed the stand of Ld. AO by observing that the said judicial pronouncement was binding. Aggrieved, the revenue is in furthe appeal before us. As brought to the notice that even the department’s Special Leave Petition against the said binding judgement has been dismissed by Hon’ble Apex Court [2018 (10) TMI 590 - SC ORDER] - Accordingly, no infirmity could be found in the impugned order. - Decided against revenue Issues:1. Assessment of indexed cost of acquisition for computation of LTCG.2. Reliance on a judgment of Bombay High Court when the SLP is pending before the Supreme Court.Analysis:Issue 1: Assessment of indexed cost of acquisition for computation of LTCGThe appeal by the revenue for Assessment Year 2014-15 challenges the order of the Ld. Commissioner of Income-Tax (Appeals)-56, Mumbai, regarding the indexed cost of acquisition. The assessee, a resident individual, sold inherited immovable property purchased by the parents before 01/04/1981. The assessee claimed indexation benefits from FY 1981-82, but the Ld. AO denied it due to the pending Special Leave Petition filed by the department against a judgment of the Bombay High Court. The Ld. CIT(A) reversed the AO's decision, citing the binding nature of the judicial pronouncement. The revenue appealed the decision.Issue 2: Reliance on a judgment of Bombay High Court when the SLP is pending before the Supreme CourtThe revenue contested the Ld. CIT(A)'s reliance on the judgment of the Bombay High Court in the case of Manjula Shah Vs. DCIT, despite the pending Special Leave Petition before the Supreme Court. However, it was noted that the department's Special Leave Petition against the said judgment was dismissed by the Supreme Court on 18/09/2018 (SLP No. 19924/2012). Consequently, the impugned order was upheld, and the appeal was dismissed.This judgment highlights the significance of judicial precedents and the impact of pending Special Leave Petitions on the applicability of such precedents in tax assessments. The decision underscores the importance of following binding judicial pronouncements until they are overruled or set aside by higher authorities.