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2015 (2) TMI 715 - HC - Income TaxRevision u/s 263 - computation of capital gains arising on transfer of a capital asset acquired succession - benefit of indexation from April 1, 1981 as per AO or from April 23, 2000 as per CIT(A) - assessees are the legal heirs of one Mr. C. B. Devaiah who owned the property which had been acquired by him prior to April 1, 1981 - Held that:- When an asset is acquired by way of inheritance, the cost of acquisition of the asset should be calculated on the basis of the cost of acquisition by the previous owner and the said cost of acquisition of the previous owner has to be calculated on the basis of the indexed cost of acquisition as provided in Explanation (iii) to section 48. Though in the definition of "indexed cost of acquisition", the words used are, "in which the asset was held by the assessee", a harmonious reading of sections 48 and 49 makes it clear for the purpose of "indexed cost of acquisition", it has to be understood as the first year in which the previous owner held the said property. Otherwise, if the date of inheritance is taken into consideration, then the cost of acquisition of the asset on that date corresponding to the market value is to be taken into consideration. Otherwise, take the cost of acquisition on the day the previous owner acquired it and apply the "indexed cost of acquisition" and then calculate the capital gains and the tax payable. Tribunal was correct concluding that while computing the capital gains arising on transfer of a capital asset acquired by the assessee through succession, the indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee actually became the owner of the asset through succession. See CIT v. Manjula J. Shah [2011 (10) TMI 406 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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