|The Tax Publishers2021 TaxPub(DT) 0450 (Mad-HC)
INCOME TAX ACT, 1961
Where asset in question was received by assessee as a gift as mentioned in section 49(1)(ii); the period of holding of the said asset by the previous owner was also needed to be considered for purpose of treating such asset as short-term capital asset or long-term capital asset.
Capital gains - Deduction under section 54F - Assessee received a gift of a trademark through a settlement deed -
Assessee received a gift of a trademark through a settlement deed. AO considered the said capital asset as a short-term capital asset as per the definition under section 2(42A) read with section 49(1), since the assessee held the trademark for a period of less than four months. Accordingly, AO disallowed the deduction claimed by the assessee under section 54F by considering the long-term capital gain declared by the assessee as short-term capital gain. Held: AO concluded that the trademark held by assessee was not a gift. However, going through the covenants and conditions contained in the settlement deed, it was found that the said document was only a deed of gift because it was voluntary as there was no consideration passed on and the donee accepted the gift unconditionally. Therefore, Explanation 1(b) of section 2(42A) would be applicable in the instant case and the period of holding of the asset by the previous owner was also needed to be considered as the assessee received the asset through gift or Will as mentioned in section 49(1)(ii). Therefore, the assessee's claim of long-term capital gain was allowed and consequently, the claim for deduction under section 54F was also allowed.
FAVOUR : In assessee's favour.
A.Y. : 2012-13
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