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2007 (8) TMI 484 - AT - Income TaxDetermining ALV of the property - Income from house property u/s 23(1)(a) - Capital gains - Cost with reference to certain modes of acquisition - HELD THAT:- Neither the Assessing Officer nor the CIT (Appeals) has alleged the action of the Assessing Officer regarding property at Vasant Vihar, New Delhi remained vacant from December, 2000 till April 2002. We are therefore inclined to agree with the learned AR that both the lower authorities were not justified for taking the income from house property u/s 23, as per provisions of section 23(1)(c) (sic) of the Act. Accordingly, we reverse the action of the lower authorities and direct the Assessing Officer to delete the addition made with respect to property at 8-Vasant Vihar, New Delhi. Computation of capital gain - shares devolved on the assessee on the death of her husband - In the instant case, the Assessing Officer has correctly adopted the cost of acquisition of the shares/securities sold at the cost to Mr. H.C. Misra. However, in substituting the "indexed cost of acquisition", he has changed the base year from the year of actual purchase to 1997-98 when these devolved upon the assessee. The base year as determined by the learned Assessing Officer is erroneous. There cannot be two different dates in respect of the same asset devolving on the heir, one date to determine the date of cost of acquisition and another to determine the indexed cost of acquisition. Even otherwise the period of holding for determining long-term capital gains includes the period for which the original owner held the asset that devolved upon the legal heir. Accordingly, the Assessing Officer is directed to recompute capital gains on sale of securities by indexing cost of acquisition with reference to the year in which husband of assessee acquired them. Property at the farm house at Village Masudpur being in the nature of farm house - There is no merit in the action of the Assessing Officer for taking the rental income u/s 22 of the Act. In the interest of justice and fair play, this ground is restored to the file of the Assessing Officer for deciding the issue afresh after considering the submissions of the assessee and the definition of the agricultural income contained u/s 2(2A)(c) of the Act. The cross-objection was in support of the CIT(Appeals)’s action, which we have decided hereinabove - In the result, both the appeals of the revenue and assessee are partly allowed and cross-objection is dismissed as infructuous.
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