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2018 (5) TMI 44 - AT - Income TaxTaxing of capital gains - indexed cost of acquisition - Held that:- We find that the entire sale consideration has been considered as capital gains and no indexation benefit has been considered while working out the capital gains. The mode and manner of computing capital gains is given in Section 48 of the Act. The 2nd proviso to Section 48 provides that where long term capital gains arise from the transfer of a long term capital asset, the cost of acquisition of the asset has to be read as “indexed cost of acquisition”. Indexed cost of acquisition has been defined in Clause-(iii) of the Explanation to Section 48 as an amount which bears to the cost of acquisition the same proportion as the cost inflation index for the year in which the asset is transferred beard to the cost inflation index for the first year in which the asset was held by the Assessee or for the year beginning on the 1st day of April, 1981, whichever is later. It is not the case of the Revenue that the asset sold by the Assessee is not a long term capital asset and the gains arising thereto are not long term capital gains. We are of the view that the capital gains have to be computed after considering the indexed cost of acquisition, which has not been done in the present case. At this juncture, it would be relevant to refer to CBDT Circular No.14 (XL-35) dated 11/04/1955 which states that the Officers of the Department must not take advantage of the ignorance of an Assessee as to his rights & it is one of their duties to assist a tax-payer in every way particularly in the matter of claiming and securing relief. It is also a settled law that the Circulars issued by CBDT are binding on the Department. We are of the view that in the interest of justice, the matter needs to be remanded to the file of Assessing Officer to work out the capital gains in accordance with law. We, therefore, without deciding the issue on merits, restore the issue back to the file of Assessing Officer and direct him to decide the issue afresh in accordance with law.
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