TMI Blog2012 (3) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the whole of the amount invested by the assessee in the purchase of residential house - assessee purchased residential property in joint name with his wife and claimed deduction under sec. 54 in respect of amount of invested in residential property and the whole purchase consideration was paid by the assessee only out of sale proceeds of the property the name of his wife in the agreement to transfer was included only to avoid future hassle due to old age of the assessee his wife has not contributed towards purchase of property nor does her name get reflected in the possession certificate - Held that :- the assessee had invested ₹ 80,00,000/- in the house property, which was jointly held by him with his wife, his wife is a joint owner and did not have any source of income - property was purchased only by the assessee by deploying long term capital gain on sale of property, which he received on inheritance - the name of his wife has been entered in the sale agreement just for the purpose of security reasons - as per Section 64(1)(iv) subject to provisions of sec. 27(i) the income as arises directly or indirectly to the spouse of an individual from the assets transferred di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of share. Since the above property was built by his father in 1965 and was expanded in 1971, the assessee took cost of acquisition at ₹ 2,50,000/- being the fair market value of the property as on 1.04.1981. The assessee accordingly worked out the indexed cost of acquisition with reference to the acquisition of property as on 1.04.1981. However, the Assessing Officer interpreted the provisions of Explanation ( iii ) to section 48 of the Act in such a way that the assessee could get benefit of indexation only from the date when the asset was first held by him. The AO allowed benefit of indexation with reference to F.Y. 1990-91 and not for F.Y. 1980-81 as claimed by the assessee. The AO relied on the decision of ITAT, Delhi Bench in the case of Arun Shungloo Trust [IT Appeal No. 1336/Delhi/2005 dated 25th January, 2008]. The AO computed the cost of acquisition at ₹ 7,12,912/-. 4. The second issue for consideration is in relation to allowing deduction under sec. 54 of the Act in respect of the whole of the amount invested by the assessee in the purchase of residential house. The assessee purchased residential property at C-602, The Residency, Ardee City ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovides that in determining the period of holding where such an asset was acquired in the circumstances mentioned under sec. 49(1), the period of holding by previous owner shall be included. Since father of assessee acquired the property prior to 1.04.1981 and the period of previous owner was to be included, the learned CIT(A) held that cost inflation index was to be applied with reference to 1.04.1981 and not from the date on which he became owner of the property. As regards second issue, the learned CIT(A) observed that the assessee had invested ₹ 80,00,000/- in the house property, which was jointly held by him with his wife, his wife is a joint owner and did not have any source of income. The new property was purchased only by the assessee by deploying long term capital gain on sale of property, which he received on inheritance. It was also clarified that at the time of purchase of new property, the same was originally transferred to assessee only, a fact duly documented by agreement to transfer and in the possession certificate. It was also informed that at a later stage, the name of the wife of assessee was included in order to avoid future hassle as both the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more than thirty-six months immediately preceding the date of its transfer. Therefore, from the Explanation 1 to sec. 2(42A), it is clear that for determination of period of holding in respect of a capital asset, the period for which the capital asset was held by the previous owner has to be included. Therefore, the period from 1.04.1981 till the death of previous owner shall be included in the period of holding by the assessee for the purpose of determination of indexation cost of the property. Our view is in line with the decision of ITAT, Special Bench in the case of Manjula J. Shah ( supra ). Respectfully following this decision of Special Bench of the Tribunal, it is held that indexation cost of the asset transferred has to be taken from 1.04.1981and not from the date on which the assessee became owner of the property. Accordingly, we do not find any infirmity in the order passed by the learned CIT(A) holding that benefit of indexation cost will be available to the assessee with reference to fair market value of the asset as on 1.04.1981. 9. As regards second issue, the assessee had invested entire amount of ₹ 80,00,000/- in the new asset and the name of his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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