A Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) in the case of Lakshman M. Charanjiva versus Income Tax Officer, held that indexation benefit against the acquisition cost shall be given on its index of the year in which payment was actually made.
The sole issue in the instant case was the manner of computation of cost of acquisition for getting indexation benefit. During the impugned year, Assessee sold a property undisputedly but calculated the indexed cost wrongfully since the purchase price remitted in instalments during the period between financial years 2006-07 to 2011-12.
But the calculation made by considering the index of the financial year 2007-2008, this contested before this Tribunal. However, the Assessing Officer worked out the indexation cost based on the respective years of the index and made certain additions.
Being aggrieved Assessee carried the matter before the First Appellate Authority and the same was dismissed. Now the aggrieved Assessee appealed before this Tribunal and the counsel for Assessee supported the calculations made by the Assessee.
The bench comprising of Judicial Member C.N Prasad and Accountant Member Manoj Kumar Aggarwal heard the contention and perused the documents cited by both the parties.
The bench pressed the relevant decision of Gujarat High Court rendered in Nirmal Kumar Seth Vs CIT and observed as “indexation benefit against the cost of acquisition shall be available to the assessee on the basis of index of the year in which the payments were actually made by the assessee.”
Accordingly, the ITAT directed the Assessee subsequent payments made in different financial years shall be indexed by applying the respective indexes of those years.To Read the full text of the Order CLICK HERE