TMI Blog2007 (8) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... the income from house property u/s 23, as per provisions of section 23(1)(c) (sic) of the Act. Accordingly, we reverse the action of the lower authorities and direct the Assessing Officer to delete the addition made with respect to property at 8-Vasant Vihar, New Delhi. Computation of capital gain - shares devolved on the assessee on the death of her husband - In the instant case, the Assessing Officer has correctly adopted the cost of acquisition of the shares/securities sold at the cost to Mr. H.C. Misra. However, in substituting the indexed cost of acquisition , he has changed the base year from the year of actual purchase to 1997-98 when these devolved upon the assessee. The base year as determined by the learned Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue against the common order of CIT (Appeals) dated 5-5-2006 for the assessment year 2002-03, in the matter of order passed under section 143(3) of the Income-tax Act, 1961. 2. Rival contentions have been heard and record perused. During the course of assessment, the Assessing Officer found that the assessee was having income from various heads including house property. The assessee was owning four properties at Vasant Vihar, Delhi, flat at Haridwar and a farm house at Masudpur. The assessee did not show any income from flat at Haridwar. Regarding property at Vasant Vihar the assessee had claimed that it was let out till December 2000 and after that it was lying vacant till April 2000 ( sic ). As per sub-section (1)( c ) of section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of this property. There was also property at Masudpur in the form of agricultural land and farm house thereon, no income from such property was shown. The Assessing Officer, therefore, assessed income under section 22 in respect of Haridwar property and also from agricultural farm house. 4. By the impugned order, CIT (Appeals) confirmed the action of the Assessing Officer with regard to determination of ALV for property at Vasant Vihar, New Delhi whereas in respect of property at Haridwar, he deleted the addition by observing that flat at Haridwar was in the nature of Dharmashala, no rent may be taken from it. The CIT (Appeals) also held that the Assessing Officer was correct in taking the valuation of farm house on the basis of ALV a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssability of income from the assessee s farm house at village Masudpur, the order of the learned Assessing Officer was liable to be quashed in terms of the judgment in Mool Chand Mahesh Chand v. CIT (reported as 115 ITR 1). (3) That the learned CIT (Appeals) erred in not holding that the property at the farm at village Masudpur being in the nature of an out-house and well covered in the definition of agricultural income under section 2(2A)( c ) of the Act, no income could deemed to accrue under section 22 of the Act and further erred in determining ALV of the property at Rs. 1,20,000. (4) That the order of the learned authorities below being contrary to the facts and circumstances of the case and in law the appeal be allowed." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than the sum referred to in clause ( a ) of section 23(1), the amount so received or receivable will be the annual value for the purpose of section 22 of the Act. This clause ( c ) has been inserted in the statute book by the Finance Act, 2001 with effect from 1-4-2002, there is no justification in the action of the Assessing Officer for taking the annual value of the property as per provisions of section 23(1)( a ) of the Act. Neither the Assessing Officer nor the CIT (Appeals) has alleged the action of the Assessing Officer regarding property at Vasant Vihar, New Delhi remained vacant from December, 2000 till April 2002. We are therefore inclined to agree with the learned AR that both the lower authorities were not justified for taki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lved upon the assessee. The base year as determined by the learned Assessing Officer is erroneous. There cannot be two different dates in respect of the same asset devolving on the heir, one date to determine the date of cost of acquisition and another to determine the indexed cost of acquisition. Even otherwise the period of holding for determining long-term capital gains includes the period for which the original owner held the asset that devolved upon the legal heir. Accordingly, the Assessing Officer is directed to recompute capital gains on sale of securities by indexing cost of acquisition with reference to the year in which husband of assessee acquired them. 9. With respect to property at the farm house at Village Masudpur being ..... X X X X Extracts X X X X X X X X Extracts X X X X
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