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2010 (8) TMI 820 - AT - Income TaxComputation of capital gain - Addition on long-term capital gain - sale of the residential flat - expenditure incurred wholly and exclusively in connection with such transfer - Whether sale price of Rs. 90,00,000 realized by the assessee is to be adopted or Rs. 1,26,43,800 as adopted by the AO ? HELD THAT:- According to the scheme of capital gain, as per s. 48, while computing the capital gain, the assessee is entitled to get deduction from the sale value of the asset liable for capital gain, the amount of cost of acquisition of asset and the cost of any improvement thereon. Without making the payment of the amounts to the builder the assessee could not have obtained the conveyance deed. Therefore, we are of the opinion that the AO is wrong in taking the cost of acquisition only as stated in the conveyance deed. As against that the assessee has filed evidence on record to contend that what is shown by him as cost of acquisition are the payments made to the builder for getting the right over the property which is sold by him. In our considered opinion such claim of the assessee could not be denied unless proved otherwise. There is no material on record to suggest that the payments which are stated to be made by the assessee were not incurred by him as the cost of the said flat which has been subject-matter of sale during the year under consideration. It is so with respect to base price, processing fee, preference charges, external development charges, fire fighting charges, generator charges, etc. which all will form cost of acquisition incurred by the assessee for getting the ownership of the asset and, therefore, the assessee is entitled to get deduction thereof under the provisions of s. 48(ii). Computation of indexed cost of acquisition - date from which the indexed cost of acquisition is to be computed? - HELD THAT:- The assessee had acquired a right to get a particular flat from the builder and that right of the assessee itself is a capital asset. The word ‘held’ used in s. 2(14) as well as Explanation to s. 48 clearly depicts that assessee must have some right in the capital asset which is subject to transfer. By making the payment to the builder and having received allotment letter in lieu thereof, the assessee will be holding capital asset and, therefore, the benefit of indexation has to be granted to the assessee on the basis of payments made by him for acquiring the said asset and the assessee has rightly claimed the indexation benefit from the dates when he has made the payments to the builder. Therefore, we see force in the claim of the assessee. The AO is directed to provide the benefit of indexation to the assessee in the manner in which the assessee has claimed. In the result, the appeal filed by the assessee is allowed.
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