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2015 (6) TMI 31 - AT - Income TaxComputation of capital gain - property in question was acquired by way of gift/will - the indexed cost of acquisition has to be taken from the date on which it was held by the previous owner and not from the date from which the asset was first held by the assesse as held by AO - CIT(A) deleted the addition - Held that:- The benefit of indexed cost of inflation is given to ensure the taxpayer pays capital gains tax on ‘real or actual gain’ and not on increase in capital value of property due to inflation. While computing capital gains arising on transfer of capital assets, acquired by the assessee under a gift, indexed cost of acquisition has to be computed with reference to the year in which previous owner, first held the asset and not the year in which assessee became the owner of the asset. Explanation (iii) provides index cost of acquisition means an amount which bears to the cost of acquisition the same proportion as cost inflation index for the year, in which the asset is transferred bears to the cost inflation index for the first year in which the asset was held by the assessee or for the year beginning on the first day of April, 1981. The property in question was gifted on 01/02/2003 and the assessee sold the flat on 30/06/2003 for ₹ 1.10 crores. Applying the decision of the Hon’ble jurisdictional High Court pronounced in the case of Manjula J. Shah (2011 (10) TMI 406 - BOMBAY HIGH COURT), the capital gains liability has to be computed by considering that the assessee held the asset from the date it was held by the previous owner and the same analogue has to be applied in determining the indexed cost of acquisition. Since the property in question was acquired by way of gift/will by the assessee, the index cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset, consequently, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income Tax (Appeals). - Decided in favour of assesse.
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