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2014 (11) TMI 944 - HC - Income TaxComputation of indexed cost of acquisition on transfer of capital asset - Whether the tribunal is right in concluding that while computing the capital gains arising on transfer of a capital asset acquired by the assessee through succession, the indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee actually became the owner of the asset through succession – Held that:- The Tribunal was rightly of the view that the decision in CIT v. Manjula J. Shah [2011 (10) TMI 406 - BOMBAY HIGH COURT] relied upon wherein it has been held that the Commissioner was not justified in not following the decision of the Hon'ble Bombay High Court, as the ratio of the decision of the Bombay High Court rendered in the context of acquisition of property by way of gift will apply with greater force when property devolves by succession - though in the definition of 'indexed cost of acquisition', the word used are, "in which the asset was held by the assessee" a harmonious reading of Sections 48 and 49 makes it clear that, for the purpose of 'Indexed Cost of Acquisition', it has to be understood as the first year in which the previous owner held the said property - Otherwise, if the date of inheritance is taken into consideration, then the cost of acquisition of the asset on that date corresponding to the market value is to be taken into consideration - Otherwise, take the cost of acquisition on the day the previous owner acquired it and apply the "Indexed Cost of Acquisition" and then calculate the capital gains and the tax payable - the CIT was not justified in exercising his jurisdiction u/s 263 – Decided against revenue.
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