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TMI Blog2017 (8) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... f indexation from the period when assessee acquired it, would defeat the purpose of statute. If the object of the legislature is to tax the gains arising on transfer of a capital acquired under 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. AO is directed to re-compute the capital gains by adopting year for the indexed cost of acquisition of the capital asset in question with reference to the year in which the previous ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes to the determination of indexed cost of acquisition. The assessee during the year sold a plot of land on Malabar Hill Division for a consideration of ₹ 54 crores, the stamp value of which was ₹ 54,51,78,000/- alongwith other owners. The assessee s share in the property was 1/12. Similarly the assessee has sold its rights in respect of Room No. 4 at 97, Bungalow Walkeshwar Road, for a consideration of ₹ 17,25,500/- market value of which was ₹ 22,04,000/-. The assessee has also sold his share (being 1/6th) in Room No. 5 at 97, Bungalow Walkeshwar Road for a consideration of ₹ 1,03,70,000/-, market value of which comes to ₹ 1,32,45,000/-. The AO also noted that the assessee has claimed indexed cost of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost inflation index for the year 1981-82 i.e. 100. However, the Assessing Officer is of the opinion that the indexed cost of acquisition is to be computed taking the year of acquisition as 2004-05 i.e. the year when the appellant inherited the subject property. Thus, the sole controversy is that whether for the purpose of computing long term capital gains arising from the transfer of a capital asset which had become property of the appellant by succession, inheritance the indexed cost of acquisition of such capital asset has to be computed with reference to the year in which the previous owner first held the asset, in the present case 1981-82, or with reference to the year i.e. F.Y. 2004-05 in which the appellant first held the asset in q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. As rightly contended by the assessee, 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 section 48, that expression has to be understood as defined under section 2 Explanation 1(i)(b) to section 2(424) provides that in determining the period for which an asset is held by an assessee under a gift, the period for which the said asset vas held by the previous owner shall be included. As the previous owner held the capital asset from 29-1-1993, as per Explanation 1(i)(b) to section 2(42A), the assessee is deemed to have held the capital asset from 29-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2(42A) cannot he. applied in determining the indexed cost of acquisition under section 48 [Para 18] In the insult, that the Tribunal was justified in holding that while computing the capital gains arising on transfer of a capital asset acquired by the assessee under a gift, the indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee became the owner of the asset [Para 24] 8.4 Thus the Bombay High Court clearly held that the indexed cost of acquisition of such capital asset acquired under a gift has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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