9911796707
TMI Blog2015 (10) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT vs Manjula J. Shah (2012) 68 DTR (BOM) 269: 2012 249 CTR (BOM) 270. This assertion of the assessee was not controverted by the ld. DR with the help of any other case or on different facts. 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the property in question was originally purchased by the partnership firm in the year 1975. The father of the assessee expired in 1976 who was a partner in the said firm. The assessee has taken the cost of the property as on 01/04/1981, while computing long term capital gain, at Rs. 44,32,500/- as against the cost price given by the valuer as Rs. 44 lakh. For the purpose of claiming rights in the property, the accounts of the firm were made up on the date of sale and sale consideration so received was distributed among all the legal heirs of the partners of the firm. The assessee received 1/8th share out of the total sale consideration and the same was offered for tax in his return under the head income from long term capital gain. The Assessing Officer was of the view that the right on the property arise in the hands of the assessee after the dissolution of the firm, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act provides that any profits or gains arising from the transfer of a capital asset in the previous year shall be chargeable to income-tax under the head 'Capital gains'. Where the gains arise on transfer of long-term capital asset, as defined under s. 2(29A) of the Act, the said gains are taxed as long-term capital gains. Sec. 47(iii) of the Act provides that where a capital asset is transferred under a gift or will or inheritance, then, such transaction shall not be regarded as transfer and in such a case the liability to pay capital gains tax would not arise. Liability to pay capital gains tax, however, would arise when the assessee transfers the capital asset acquired under a gift or will for valuable consideration. The mode and the manner of computing the capital gains is provided under s. 48 of the Act. As per s. 48, the income chargeable under the head "Capital gains" is liable to be computed by deducting from the full value of the consideration received on transfer of the capital asset, the amount of expenditure incurred wholly and exclusively in connection with such transfer and the cost of acquisition of the asset and the cost of any improvement thereto. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the 1st day of April, 1981, whichever is later; (iv) 'indexed cost of any improvement' means an amount which bears to the cost of improvement the same proportion as cost inflation index for the year in which the asset is transferred bears to the cost inflation index for the year in which the improvement to the asset took place; (v) 'Cost Inflation Index', in relation to a previous year, means such index as the Central Government may, having regard to seventy-five per cent of average rise in the consumer price index for urban nonmanual employees for the immediately preceding previous year to such previous year, by notification in the Official Gazette, specify, in this behalf." 2.6. Thus, the indexed cost of acquisition has to be determined with reference to the cost inflation index for the first year in which the capital asset was 'held by the assessee'. Since the expression 'held by the assessee' is not defined under s. 48 of the Act, that expression has to be understood as defined under s. 2 of the Act. Explanation 1(i)(b) to s. 2(42A) of the Act provides that in determining the period for which an asset is held by an assessee as was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x the gains arising on transfer of a capital asset inter alia acquired by an assessee as provided under s. 49 of the Act where the assessee is deemed to have incurred the cost of acquisition. Therefore, if the object of the legislature is to tax the gains arising on transfer of a capital asset acquired under a gift or will or inheritance by including the period for which the said asset was held by the previous owner in determining the period for which the said asset was held by the assessee, then that object cannot be defeated by excluding the period for which the said asset was held by the previous owner while determining the indexed cost of acquisition of that asset to the assessee. In other words, in the absence of any indication in cl. (iii) of the Explanation to s. 48 of the Act that the words 'asset was held by the assessee' has to be construed differently, the said words should be construed in accordance with the object of the statute, that is, in the manner set out in Expln. 1(i)(b) to s. 2(42A) of the Act. 2.9. Apart from the above, s. 55(1)(b)(2)(ii) of the Act provides that where the capital asset became the property of the assessee by any of the modes specified ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
