TMI Blog2018 (10) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... ned gains was Long Term in nature and therefore, the indexation benefit as well as benefit of Section 54EC was available to the assessee. The facts on record reveal that the assessee has invested an amount of ₹ 37 Lacs in the eligible bonds as against sale consideration of ₹ 36.56 Lacs and therefore, the value of investment itself nullifies the entire sale consideration reflected by the assessee against the sale of property. - Decided in favour of assessee. - I.T.A. No.5756/Mum/2012 - - - Dated:- 10-10-2018 - Shri Saktijit Dey, JM And Shri Manoj Kumar Aggarwal, AM For the Assessee : Paresh Shaparia, Ld.AR For the Revenue : Asghar Zain VP , Ld. DR ORDER PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by assessee for Assessment Year [AY] 2009-10 is a recalled matter which contest the order of the Ld. Commissioner of Income-Tax (Appeals)-30 [CIT(A)], Mumbai, Appeal No.CIT(A)-30/ITO- 19(10(1)/IT-93/11-12 dated 20/07/2012 by raising following grounds of appeal:- I. CONFIRMING OF THE LONG TERM CAPITAL GAIN ON SALE OF IMMOVABLE PROPERTY OF ₹ 35,86,000/- AS SHORT TERM CAPITAL GAINS AND THEREBY WITHDRAWING CLAIM OF DEDU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat date of acquisition of the property was to be considered as 10/12/1999 instead of 10/08/2016 i.e. the date when procedure for transfer was completed. However, not convinced, Ld. AO opined that the gains were Short Term gains in nature and therefore, the assessee was not eligible for indexation benefit as per Section 49(1). Finally, the gains were assessed as Short Term Capital Gains and indexation benefit as well as deduction u/s 54EC was denied to the assessee. 3. Aggrieved, the assessee contested the same without any success before Ld. CIT(A) vide impugned order dated 20/07/2012 wherein the stand of Ld. AO got confirmed with following observations:- 2.3 I have gone through the assessment order, the submissions of the appellant and the facts of the case. In this case the moot question is whether the sale of the immovable property is LTCG entitled for exemption u/s.54EC or it is STCG. The AO held that it is STCG and not LTCG and consequently the AO did not allow exemption u/s 54EC of the I.T. Act. The appellant has contended that by family arrangement dated 08.08.2006 the other members had relinquished the property in favour of the appellant. It is also contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng August, 2006. Nevertheless, the property devolved upon the assessee on 10/12/1999 itself i.e. the date of death of the grandmother. Our attention has been drawn to the statutory provisions to bolster the claim that the holding period of previous owner was also to be included while counting the holding period of the assessee and therefore, the indexation benefit as well as benefit of Section 54EC was available to the assessee. Per Contra, Ld. Departmental Representative [DR], Shri Asghar Zain placed reliance on the stand of lower authorities. 5. We have carefully heard the rival contentions and perused relevant material on record. Some undisputed facts are that the assessee has inherited the property from her grandmother who died intestate on 10/12/1999. Nothing on record suggest that the property was first acquired by the legal heirs and thereafter transferred to the assessee. Even assuming that the property first devolved on the legal heirs and thereafter the assessee acquired the property from those legal heirs under a gift, even then in terms of Section 2(42A) Explanation 1(b) read with Section 49(1)(ii), the holding period of donor was includible while countin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29/1/1993, as per Explanation 1(i)(b) to Section 2(42A) of the Act, the assessee is deemed to have held the capital asset from 29/1/1993. By reason of the deemed holding of the asset from 29/1/1993, the assessee is deemed to have held the asset as a long term capital asset. If the long term capital gains liability has to be computed under Section 48 of the Act by treating that the assessee held the capital asset from 29/1/1993, then, naturally in determining the indexed cost of acquisition under Section 48 of the Act, the assessee must be treated to have held the asset from 29/1/1993 and accordingly the cost inflation index for 1992-93 would be applicable in determining the indexed cost of acquisition. 18) 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 29/1/1993 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words used in clause (iii) of the Explanation to Section 48 of the Act has to be read by ignoring the provisions contained in Section 2 of the Act runs counter to the entire scheme of the Act. Section 2 of the Act expressly provides that unless the context otherwise requires, the provisions of the Act have to be construed as provided under Section 2 of the Act. In Section 48 of the Act, the expression 'asset held by the assessee' is not defined and, therefore, in the absence of any intention to the contrary the expression 'asset held by the assessee' in clause (iii) of the Explanation to Section 48 of the Act has to be construed in consonance with the meaning given in Section 2(42A) of the Act. If the meaning given in Section 2(42A) is not adopted in construing the words used in Section 48 of the Act, then the gains arising on transfer of a capital asset acquired under a gift or will be outside the purview of the capital gains tax which is not intended by the legislature. Therefore, the argument of the revenue which runs counter to the legislative intent cannot be accepted. 21) Apart from the above, Section 55(1)(b)(2)(ii) of the Act provides that where the cap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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