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2018 (10) TMI 676 - AT - Income TaxLong term capital gains - The assessee inherited the said flat by Will after the death of her father. - legal representative of the deceased, bequeathed the capital asset in favour of the assessee appellant - Residential flat in a Cooperative Housing Society - deduction of payment made for the purpose of clearing of the mortgage - Indexed cost of acquisition. Held that:- As a result of such payment made for the purpose of clearing of the mortgage the interest of the mortgagee in the property has been acquired by the heir. The said payment has, therefore, to be regarded as cost of acquisition under section 48 read with section 55(2) of the IT Act. For the purpose of indexation, the cost of acquisition in the hands of the deceased father of the assessee has to be taken into consideration and not at the time of acquisition of the property by the assessee. Thus when the assessee has received nothing from the sale consideration of the property in question, then the question of any capital gain in the hands of the assessee does not arise. Accordingly, following the decision of Hon’ble Supreme Court in the case of R.M. Arunachalam vs. CIT [1997 (7) TMI 5 - SUPREME COURT], the amount for discharge of mortgage interest has to be considered as cost of acquisition and accordingly the net consideration on sale of the flat in question will be Nil. Accordingly, we set aside orders of the authorities below, qua this issue and allow the claim of the assessee.
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