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TMI Blog2016 (12) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... For The Appellant : None For The Respondent : Shri. A.V.Sreekanth, IRS, JCIT ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER Assessee in this appeal is aggrieved that benefits of indexation while working out capital gains was not allowed to it, from the year in which it inherited the property. 2. Facts apropos are that assessee alongwith his father, brother and sister had sold a property wherein bearing door no.199, New No.90, Govindappa Naicken Street, Chennai measuring one ground and 334 sq.ft on 18.04.2011 for a consideration of E87,00,000/-, assesses s share of sale consideration E21,75,000/-. While computing long term capital gains, assessee took the cost of land and building with the base price of financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, assessee would be deemed to have held the capital asset from the date on which the donor acquired the property in so far as indexation benefit was concerned. 5. Per contra, ld. Departmental Representative strongly supported the orders of the authorities below. 6. We have considered the rival contentions and the orders of the authorities below. Hon ble Bombay High Court in the case Manjula J. Shah (supra) held as under:- 16. For better appreciation of the dispute, we quote the relevant part of section 48 herein : 48. Mode of computation.-The income chargeable under the head 'Capital gains' shall be computed, by deducting from the full value of the consideration received or accruing as a result of the result of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 non manual employees for the immediately preceding previous year to such previous year, by notification in the Official Gazette, specify, in this behalf. 17. It is the contention of the Revenue that since the indexed cost of acquisition as per clause (iii) of the Explanation to section 48 of the Act has to be determined with reference to the cost inflation index for the first year in which the asset was held by the assessee and, in the present case, as the assessee held the asset with effect from February 1, 2003, the first year of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the asset from January 29, 1993, and, accordingly the cost inflation index for 1992-93 would be applicable in determining the indexed cost of acquisition. 19. If the argument of the Revenue that the deeming fiction contained in Explanation 1(i)(b) to section 2(42A) of the Act cannot be applied in computing the capital gains under section 48 of the Act is accepted, then, the assessee would not be liable for long-term capital gains tax because it is only by applying the deemed fiction contained in Explanation 1(i)(b) to section 2(42A) and section 49(1)(ii) of the Act, the assessee is deemed to have held the asset from January 29, 1993, and deemed to have incurred the cost of acquisition and, accordingly, made liable for the long-term cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der a gift or will 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 clause (iii) of the Explanation to section 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 Explanation 1(i)(b) to section 2(42A) of the Act. 21. To accept the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee while computing the capital gains under section 48 of the Act. The question of deducting the cost of improvement incurred by the previous owner in the case of an assessee covered under section 49(1) of the Act would arise only if the period for which the asset was held by the previous owner is included in determining the period for which the asset was held by the assessee. Therefore, it is reasonable to hold that in the case of an assessee covered under section 49(1) of the Act, the capital gains liability has to be computed by considering that the assessee held the said asset from the date it was held by the previous owner and the same analogy has also to be applied in determining the indexed cost of acquisition. 23. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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