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2016 (7) TMI 689 - AT - Income TaxDetermination of capital gains on the sale of capital asset - short-term capital gains or long-term capital gains - exemption under section 54 denied - period of holding of property inherited by the assessee from his father - application of the cost of acquisition in terms of section 49(1)(iii)(a) - Held that:- In the present case, the assessee inherited the property on November 20, 2005. However, the said property was purchased by the assessee's ancestors, i.e., grandfather, the late Keshavdas on June 14, 1971, and after that it was bequeathed to the assessee's father, Shri Harichand, on the death of his grandfather on June 24, 2001. Thereafter, the property was gifted to the assessee on November 20, 2005. Accordingly, the cost of indexation to be applied as on April 1, 1981, after fixing the value of asset as on April 1, 1981, and it cannot be said that the assessee acquired the property under dispute on November 20, 2005, so as to compute the capital gains as short-term capital gains. In other words, capital gains has to be assessed as long-term capital gains by fixing the cost of asset as on April 1, 1981, and, thereafter, applying the cost of inflation index in terms of section49(1)(iii)(a) of the Act and, consequently, the assessee is also entitled for exemption under section 54 of the Act. - Decided in favour of assessee.
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