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2020 (4) TMI 560 - AT - Income TaxCapital gain on the sale of inherited property - indexed cost of acquisition to be computed with reference to the year in which the previous owner first held the asset OR year in which the assessee became the owner of the asset - HELD THAT - In the present case, admittedly, the assessee inherited the property on the death of her parents. Therefore, the assessee is entitled for the benefit of indexation cost from the date of acquisition of asset or from 01-04- 1981. The ld CIT(A) while passing the order followed the ratio of decision of Manjula J Shah ( 2011 (10) TMI 406 - BOMBAY HIGH COURT - No infirmity in the order passed by Ld. CIT(A). In the result the first issue is decided in favour of assessee. Benefit of exemption u/s 54 in case residential house is purchased outside India - CIT (A) granted relief to the assessee by following the decision of Hon ble Gujarat High Court in Leena J Shah 2016 (12) TMI 351 - GUJARAT HIGH COURT - HELD THAT - CIT(A) held that amendment in exemption in incorporating the word constructed one residential house in India in section 54F is inserted by Finance Act 2014 and applicable w.e.f . 01-04-2015 and accordingly would apply from 2015-16. The case of the assessee relates to AY 2013- 14. Therefore, the amendment brought by Finance Bill (No.2) Act, 2014 is not applicable in the case of assessee. Similar view was taken by Hon ble Gujarat High Court in Leena J Shah 2016 (12) TMI 351 - GUJARAT HIGH COURT and CIT vs Smt. VK Karapagam 2014 (8) TMI 899 - MADRAS HIGH COURT and Mumbai Tribunal in DCIT vs Shah Rukh Khan 2018 (6) TMI 147 - ITAT MUMBAI . - Decided against revenue
Issues:
1. Computation of capital gain on the sale of inherited property and indexed cost of acquisition. 2. Eligibility for benefit under section 54 of the IT Act in relation to capital gains arising in India. 3. Interpretation of tax statutes and application of temporal conditions under section 54(l)(ii). 4. Amendment in section 54 of the IT Act, 1961 and its applicability. Issue 1: Computation of Capital Gain and Indexed Cost of Acquisition The appeal by the revenue challenged the order of CIT(A) regarding the computation of capital gain on the sale of inherited property. The main contention was whether the indexed cost of acquisition should be computed with reference to the year in which the previous owner first held the asset or the year in which the assessee became the owner. The CIT(A) allowed indexation from 01-04-1981, citing a decision of the jurisdictional High Court. The Tribunal upheld this decision, stating that indexation should be given from the date of acquisition of the asset or from 01-04-1981 in cases of inheritance, as per relevant case law. Issue 2: Benefit under Section 54 of the IT Act The second issue involved the eligibility for benefit under section 54 of the IT Act in relation to capital gains arising in India. The AO denied the exemption as the assessee purchased a residential property outside India. However, the CIT(A) granted relief to the assessee, following a decision of the Gujarat High Court. The Tribunal agreed with the CIT(A) and held that the amendment incorporating the requirement of constructing a residential house in India was not applicable for the relevant assessment year, as per the decisions of various High Courts and Tribunals. Issue 3: Interpretation of Tax Statutes and Temporal Conditions The issue of interpretation of tax statutes and application of temporal conditions under section 54(l)(ii) was also raised. The Tribunal considered the arguments of both parties but ultimately dismissed the grounds raised by the revenue, as the benefit of exemption was granted based on the existing legal framework and relevant case law. Issue 4: Amendment in Section 54 of the IT Act The final issue pertained to the amendment in section 54 of the IT Act and its clarificatory nature. The Tribunal reiterated that the relevant amendment was not applicable for the assessment year in question and relied on decisions of High Courts and Tribunals to support their conclusion. In conclusion, the appeal filed by the revenue challenging the order of CIT(A) was dismissed by the Tribunal, upholding the decisions regarding the computation of capital gain, eligibility for benefit under section 54, interpretation of tax statutes, and the applicability of the amendment in section 54 of the IT Act.
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