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| The Tax Publishers2020 TaxPub(DT) 3755 (Jp-Trib) : (2020) 185 ITD 0446 INCOME TAX ACT, 1961
Section 48
Where assessee sold a residential house acquired by it from her grandmother in 2008 through a registered gift deed, computation of indexation cost of acquisition of property in question so as to compute capital gains arose to assessee on its sale was to be computed by taking year of acquisition as 1988, i.e., when property was acquired by previous owner and not from year when property was gifted to assessee.
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Capital gains - Benefit of indexation - Gifted property - Year on which property was held by previous owner vis-a-vis year in which it was devolved to assessee
AO noted that assessee had calculated indexed cost of the property in question by applying the DLC rate as on the date of Gift by which the assessee received the property on 11-8-2008 as against the actual cost of acquisition of fair market value as on 17-9-1988 when the Donor had acquired the property. AO re-calculated the indexed cost by considering the actual cost of acquisition and stamp duty paid by the Grandmother of the assessee at the time of acquisition on 16-9-1988. AO also considered the JDA development expenses incurred by Grandmother as well as construction cost of the property. However, AO had taken the indexation only from the date of gift till the sale of the property as against from the date of acquisition of property by Grandmother of assessee. Held: There is no dispute that AO applied provisions of section 49(1) which is applicable in this case as the mode of acquisition by the assessee was Gift. To that extent the AO was right in considering the actual cost of acquisition in the hands of the previous owner, however, while calculating the indexed cost, AO had applied the indexed cost from 2008-09 instead of 1988 when property was acquired by previous owner. CIT(A) simply stated that AO invoked provisions of section 49(1) and took the cost of acquisition in the hands of Donee which would be deemed as the cost of acquisition in the hands of the assessee for the purpose of computing LTCG. However, CIT(A) had not looked into the issue that indexation cost computed by AO was not taken from the year of acquisition of the property by the previous owner but was taken from the year when the property was gifted by the Grandmother to the assessee. Accordingly, AO was directed to compute cost of acquisition by taking the year of acquisition as 1988 when the property was acquired by the previous owner.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 48
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