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2016 (3) TMI 17 - AT - Income TaxCalculation of capital gain - entitlement to benefit of indexation - appreciated compounded cost of appreciation applied - selection of cost of acquisition - Held that:- Capital gain is required to be calculated in case of transfer of capital asset by calculating the cost of acquisition of the capital asset and for the purpose of calculating the cost of acquisition, the fair market value is required to be determined as would have been prevailed as on 01.04.1981 and thereafter the benefit of indexation is required to be given with a view to calculate the cost of acquisition. In the present case, the property was purchased by the assessee’s father on 27.09.1965 @ ₹ 55.88 per bigha and was sold by the assessee @ ₹ 5500/- per bigha. The assessee has calculated the fair market value as on 1.4.1981 @ ₹ 5500/- per bigha as claimed by the assessee on the basis of DLC rate with effect from 01.04.1993, whereas the AO has applied the rate of ₹ 4002.65 per bigha by giving the compounded appreciation of 30.6% on the original cost of acquisition. Cost inflation index has been duly applied by the AO on the initial cost of acquisition of capital assets. Since the initial cost of acquisition is available, in our view, the AO has rightly applied the appreciated compounded cost of appreciation @ 30.6% in accordance with provisions of law. In the light of above, the appeal of the assessee is dismissed and the order passed by the ld. CIT (A) is upheld. - Decided against assessee
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