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2013 (4) TMI 608 - AT - Income TaxCost inflation index for computation of long term capital gain - Long term capital gain assessable on the sale of property sold by the father of the assessee as Power of Attorney of the assessee - On 09.07.1984, Shri Suresh Babu gifted the property acquired by him by way of gift from his father, in favour of his nieces & since they were minors at that point of time,a trust deed was executed and appointed their parents as trustees with the condition - CIT(A) convinced with the submissions made by the assessee directed AO to adopt the cost inflation index pertaining to the financial year 1981-82 - Held that:- In s. 48 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 cl. (iii) of the Explanation to s. 48 has to be construed in consonance with the meaning given in s. 2(42A). If the meaning given in s. 2(42A) is not adopted in construing the words used in s. 48, then the gains arising on transfer of a capital asset acquired under a gift or will 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. See DCIT vs. Manjula J.Shah (2011 (10) TMI 406 - BOMBAY HIGH COURT). Against revenue. Whether the CIT(A) was justified in deleting the capital gain relating to "Property No.2" - Held that:- A plain reading of the recitals made in the Gift deed dated 08-06-2005 would show that Shri V.K.Mohan(father of minors) has handed over the possession of the Property No.2 to the assessee herein. Further following recitals made in the irrevocable Power of Attorney dated 13-07-2005 executed by the assessee herein in favour of Shri V.K. Mohan show that the assessee herein accepted the gift and was also in possession of the property As per the provisions of sec. 47(iii) of the Act, the transfer of property by way of settlement deed by Shri V.K.Mohan to the assessee herein is not considered as a "transfer' and hence the same is not assessable to capital gains. On the execution of the Settlement deed, the assessee herein became absolute owner of the Property No.2 as per the Transfer of Property Act. The provisions of Transfer of Property Act are not overridden by sec. 47(iii) of the Act. Hence, CIT(A) has misdirected himself in interpreting the scope of provisions of sec. 47(iii) of the Act. Since there was absolute transfer of Property No.2 by way of settlement deed, there is no scope to interpret that there was transfer of income only without transfer of asset so as to attract the provisions of sec. 60 - the various reasoning given by CIT(A) are not in accordance with the law and are liable to be struck down. Accordingly AO was right in law in assessing the capital gain arising on transfer of Property No.2 in favour of the Construction company. Further the assessee would not be entitled for exemption u/s 54F of the Act on the purchase of property by her father. In favour of revenue.
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