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TMI Blog2015 (10) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... account of cost of acquisition and cost of improvement while computing long term capital gain (LTCG). 3. Briefly the facts are, assessee is a non-resident individual. For the AY under consideration, she filed her return of income on 31/07/07 declaring total income of Rs. 12,97,900. Though, assessee during the year had computed capital gain, but, she claimed exemption u/s 54EC of the Act for an amount of Rs. 90,00,000. During the assessment proceeding, it was noticed by AO that assessee in the relevant PY has sold a house property bearing house No. 8-2- 293/82/2/31A/A, MLA Colony, Road No. 12, Banjara Hills, Hyderabad, for a total consideration of Rs. 1,25,00,000. However, in the computation of total income filed along with the return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... space, is not acceptable. He observed that assessee got property with ground floor and 1st floor constructed in 300 sq.yds through settlement deed. Thereafter, she has not made any addition to the building. If at all any minor improvement/repairs were effected assessee is getting benefit of the same @ 30% of the rental income. He observed that assessee neither has maintained any account for construction claimed to have been made nor the bank account copies reflected any substantial withdrawal to match the claim of construction. Alleging that assessee failed to produce any evidence to substantiate the claim of construction, AO ultimately disallowed assessee's claim towards cost of acquisition and cost of construction amounting to Rs. 37,77,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 49 of the Act submitted, since the property devolved upon assessee on account of natural love and affection of father towards her, the cost of acquisition of the property has to be taken to be the cost for which her father acquired the property. As far as the cost of improvement is concerned, ld. AR referring to the deed of settlement dated 06/07/02 between assessee and her father submitted, the built up area received by assessee was 2000 sft. whereas assessee sold built up area of 3000 sft. In this context, he referred to the sale deed dated 14/02/07 executed by assessee for sale of the property. In this context, he specifically drew our attention to the schedule of property as mentioned in Annexure -1A of sale deed. Ld. AR submitted, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut knowledge of assessee sold the property to third party. Subsequently, however, to maintain cordial relationship within the family, assessee's father as envisaged in the deed of settlement dated 06/07/02, a copy of which is at page 26 of the paper book, out of natural love and affection, settled a part of property at Road No. 12, Banjara Hills consisting of 300 sqyd. Of land and building with ground floor and 1st floor having 200 sft built up area in favour of assessee. Thus, as can be seen from the terms of the deed of settlement, the property given by father of assessee to her was out of natural love and affection and without any monetary consideration. That being the case, it cannot be said that it is not a gift so as to come within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be considered to be the value of property at Delhi in exchange of which assessee got the property at Banjara Hills. In the aforesaid view of the matter, we hold that the cost of acquisition of the property cannot be taken at 'nil' . The matter can also be looked into from another angle. As can be seen from the mode of computation of capital gain provided u/s 48 of the Act, income chargeable under the head 'capital gain' shall be computed after deducting therefrom expenditure incurred wholly and exclusively in connection with such transfer of the asset and secondly, the cost of acquisition of the asset and cost of any improvement thereto. Therefore, unless there is cost of acquisition, computation provision as per section 48 will fail. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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