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2019 (12) TMI 752 - AT - Income TaxComputation of the capital gain on sale of residential properties - denial of benefit of indexation for the purpose of computing capital gain - AO rejected the claim of the assessee, as assessee did not furnish it through a return of income but by way of a letter - HELD THAT:- According to us it was not a fresh claim of the assessee but merely correction of a computation of capital gain. This issue is squarely covered in favour of the assessee by the decision of the honourable Delhi High Court in Principal Commissioner of Income tax v. Oracle (OFSS) BPO Services Ltd [2019 (1) TMI 1087 - DELHI HIGH COURT] . Where assessee had filed a revised computation of income requesting allowance of certain amounts as deduction from capital gain, since it was not a case where any new claim for deduction was made and there was merely recomputation of claim already made by assessee, such revised computation was to be accepted in the assessment proceedings. We reverse the finding of the learned CIT – A and learned assessing officer holding that the learned AO should have considered recomputation of the claim of the assessee of capital gain. Whether the indexation of the property shall be allowed to the assessee from the date of allotment of property or from the date on which the possession was given to the assessee/the date of registration? - Date on which the assessee paid the booking money for allotment of the house, he ‘held’ the property from that date, he might have ‘acquired/ purchased’ the property on later date. The basic reason for granting indexation of the cost of acquisition, which is linked with the cost inflation index, is to tax only the real income of the assessee and not the capital gain being appreciation of the property including inflation in the price (increase in the cost of living). Therefore, as the intention is to tax only the appreciation in the property excluding the appreciation in the price of the property due to inflation, the assessee must be granted the indexation of the cost in the financial year in which it has incurred/paid, irrespective of the fact that house property is subsequently registered in the name of the assessee or the possession is granted to the assessee of that property later on. In view of this, we are of the view that assessee must be granted indexed cost of acquisition of the sum paid in financial year 2005 – 2006 by applying the cost inflation index applicable to financial year 2005 – 2006 of 497 instead of cost inflation index of 551 applicable for financial year 2007 – 2008 (the year in which the possession of the property was given) to the assessee. Sale of shares allotted to the assessee under employee stock option plan[ ESOP] and taking the sale value above fair market value as income from other source u/s 56 (2) (vii) - Correct head of Income - there is no transfer of any controlling interest - assessee has sold the shares and has not received any other property - chargeable to tax under the head capital gain or as a business income - benefit of section 54F denied - HELD THAT:- Issue squarely covered by the circular number 6/2016 of the CBDT and letter dated 2/05/2016 the above transaction of the sale of the shares and consequent gain arising therefrom should be chargeable to tax under the head capital gains only. Accordingly we direct the learned AO to tax gain arising on the sale of about shares under the head capital gain only. Thus as we have already held that the profits on sale of shares would be chargeable to tax under the head capital gain, the ground number 3 of the appeal of the assessee is allowed and ground number 1 and 2 of the appeal of AO are dismissed. Grant of benefit under section 54F - As we have already held that the gains arising on the sale of the shares would be chargeable to tax under the head of capital gain, we direct learned assessing officer to grant deduction u/s 54F
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