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TMI Blog2014 (10) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... "in which the asset was held by the assessee", a harmonious reading of Sections 48 and 49 makes it clear for the purpose of 'Indexed Cost of Acquisition', it has to be understood as the first year in which the previous owner held the said property - Otherwise, if the date of inheritance is taken into consideration, then the cost of acquisition of the asset on that date corresponding to the market value is to be taken into consideration - Otherwise, take the cost of acquisition on the day the previous owner acquired it and apply the "Indexed Cost of Acquisition" and then calculate the capital gains and the tax payable – the Tribunal rightly followed Commissioner of Income-tax Versus Manjula J. Shah [2011 (10) TMI 406 - BOMBAY HIGH CO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im of the assessees in the order of assessment dated 24.12.2010 passed under Section 143(3) of the Act allowing the benefit of indexation from 1.4.1981. The Commissioner of Income Tax (Appeals) exercising his power under Section 263 of the Act was of the view that the assessing officer's order in the case of the assessees allowing the benefit of indexation from 1.4.1981 was erroneous and prejudicial to the interest of the revenue because as per explanation (iii) to Sec.48 of the Act, indexed cost of acquisition means an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. 5. Learned counsel for the revenue assailing the impugned order contends, as is clear from explanation (iii) to Section 48, the indexed cost of acquisition is to be allowed for the first year in which the asset was held by the assessees or in the year beginning on the first day of April, 1981, whichever is later. Therefore, the tribunal was not justified in interfering with the order passed by the Commissioner of Income Tax. In fact, the revenue has preferred a Special Leave Petition against the judgment of the Bombay High Court and it is pending consideration before the Apex Court and therefore, he submits the order requires to be interfered with. 6. Per contra, learned counsel for the assessees submitted if the cost of acquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not the year in which the assessee actually became the owner of the asset through succession? 8. Section 45 of the Act provides that any profits or gains arising from the transfer of a capital asset effected in the previous year shall be chargeable to income tax under the head Capital gains . Capital gains is of two types. Short-term capital gains and long-term capital gains. Depending upon the nature of capital gains the liability of the tax is determined. The mode and manner of computing the capital gains is provided under Section 48 of the Act. The income chargeable under the head capital gain shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of indexed cost of acquisition as provided in explanation (3) to Section 48. 9. Though in the definition of 'indexed cost of acquisition', the word used are, in which the asset was held by the assessee , a harmonious reading of Sections 48 and 49 makes it clear for the purpose of 'Indexed Cost of Acquisition', it has to be understood as the first year in which the previous owner held the said property. Otherwise, if the date of inheritance is taken into consideration, then the cost of acquisition of the asset on that date corresponding to the market value is to be taken into consideration. Otherwise, take the cost of acquisition on the day the previous owner acquired it and apply the Indexed Cost of Acquisit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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