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TMI Blog2012 (3) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of return of income, which was 31st July, 2008 - the assessee contented when a capital asset is acquired by an assessee by gift, inheritance, partition of an HUF, or other specified mode, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner acquired. Held that:- the assessee became owner of the property on the death of his wife who acquired property from her mother - Under sec. 49(1) where the capital asset becomes the property of the assessee under the modes specified therein, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it - cost of indexation has to be with effect from 1.4.1981, the date on which the cost of acq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R.K. Puram, New Delhi. Against the assessee's 50% share of ₹ 75,00,000/-, the assessee claimed index cost of acquisition at ₹ 13,32,980/-. It was submitted before the AO that the assessee had inherited a share in the property on the death of his wife Smt. Prabha Chandra who died on 28th November, 1994. Property was acquired by Smt. Prabha Chandra by inheritance from her mother Smt. Kamla Devi on 29.04.1984 and Smt. Kamla Devi was the owner of the property prior to 1.4.1981. Since the property was inherited, the assessee took the cost of acquisition as fair market value of the asset as on 1.4.1981 and claimed benefit of indexation from 1.4.1981. However, the AO held that the assessee had become owner of the property only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nflation in case in the first year in which the asset was held by the assessee or of the year beginning on 1.4.1981, whichever is later. Under sec. 55(2)(b)(ii), where a capital asset becomes the property of the assessee by any of the modes specified in sec. 49(1) and the capital asset was acquired by the previous owner prior to 1.4.1981, the assessee is entitled to substitute the fair market value of the asset as on 1.4.1981 as the actual cost. It was therefore, argued before the CIT(A) that the reading of the sections together, denying the benefit of indexation for the period for which the asset was held by the previous owner, contradicts the very purpose of the provisions. The assessee relied on several decisions of ITAT including the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indexed cost of acquisition of the capital asset acquired by the assessee through inheritance has to be computed with reference to the year in which the previous owner first held the asset. He, therefore, decided the first issue in favour of the assessee. As regards the second ground, the learned CIT(A) held that the assessee could have furnished the return of income under sec. 139(4) for any previous year at any time before the expiry of one year from the end of the relevant assessment year. The requirement of sec. 54 for exemption of capital gains could be fulfilled within the time limit of sec. 139(4) and not under sec. 139(1). He also observed that no other judgment of the High Courts has come to his knowledge. He, therefore, relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her mother before 1.4.1981. Under sec. 49(1) where the capital asset becomes the property of the assessee under the modes specified therein, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it as increased by the cost of any improvement of the asset incurred or borne by the previous owner or the assessee, as the case may be. In the case before us, the previous owner of the property was his wife, who acquired the property by way of inheritance. The said property was purchased by her mother before 1.4.1981. In the case of his wife cost of acquisition will be taken as on 1.4.1981. Therefore, the cost of previous owner in the hands of the assessee will be the cost in the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajesh Kumar Jalan (supra). During the course of hearing the learned Sr. DR could not cite a contrary decision to what has been held by the Hon'ble Guwahati High Court and Hon'ble Punjab & Haryana High Court. Respectfully following the decision of Hon'ble Punjab & Haryana High Court, it is held that since the assessee had invested in the new property within the time allowed under sec. 139(4) of the Act, the assessee will be entitled for exemption under sec. 54 of the Act to the extent the amount invested in the new property. Accordingly, we do not find any infirmity in the order of the CIT(A) allowing relief in respect of both the issues.
11. In the result, the appeal filed by the revenue is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X
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