2001 (7) TMI 269 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the determination of capital gain charged on the sale of inherited property u/s 48 and u/s 49 of the Income-tax Act.

Capital Gain Calculation:
The appeal concerns the refusal of relief to the assessee regarding the capital gain charged on the sale of a residential property inherited from the father. The Assessing Officer calculated the capital gain based on the indexed cost of acquisition, leading to an addition of Rs.1,21,180 to the assessee's income.

Interpretation of Provisions:
The dispute revolves around the correct application of sections 48 and 49 of the Income-tax Act. The provisions state that the cost of acquisition of an asset inherited by the assessee should be deemed as the cost for which the previous owner acquired it. The judgment emphasizes the importance of correctly determining the indexed cost of acquisition in such cases.

Validity of Inherited Property:
The judgment highlights that the property was inherited through a valid Will of the father, whose probate was granted by the High Court. The cost of acquisition should be determined based on the previous owner's acquisition cost, considering the property was acquired before 1972. The indexed cost of acquisition in the year of sale was calculated to be Rs. 9,05,701, exceeding the sale consideration, resulting in no taxable capital gain for the assessee.

Conclusion:
The Appellate Tribunal allowed the assessee's appeal, deleting the addition of Rs.1,21,180 as capital gain. The judgment clarifies the correct application of provisions related to the calculation of capital gain on inherited property, emphasizing the importance of determining the indexed cost of acquisition accurately.