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TMI Blog2015 (6) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... of this appeal on the basis of material available on record. 2.1. Before coming to any conclusion, we are reproducing hereunder the relevant uncontroverted finding recorded in the order of the ld. Commissioner of Income Tax (Appeals) for ready reference and perusal/analysis:- "3.3 I have considered the facts of the case and the submissions made by the assessee. In the case of the Commissioner of Income-tax, Mumbai vs. Manjula J Shah in Income-tax Appeal No.3378 of 2010 dated 11th October, 2011, the Hon'ble Bombay High Court has held that while computing the capital gains arising on transfer of a capital asset acquired by the assessee under a gift, the indexed cost of acquisition had 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 became the owner of the asset. In that case, the assessee's daughter purchased a flat on 29/01/1993 at a cost of Rs. 50.48 lakhs. She gifted the flat to the assessee on 01/02/2003. The assessee sold the flat on 30/06/2003 for Rs. 1.10 crores. In computing the LTCG, the assessee took the indexed cost of acquisition under Explanation (iii) to See. 48 on the basis tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod for which an asset is held by an assessee under a gift, the period for which the said asset was held by the previous owner shall be included. As the previous owner held the capital asset from 29/1/1993, as per Explanation 1(i)(b) to Section 2(42A) of the Act, the assessee is deemed to have held the capital asset from 29/1/1993. By reason of the deemed holding of the asset from 29/1/1993, the assessee is deemed to have held the asset as a long term capital asset. If the long term capital gains liability has to be computed under Section 48 of the Act by treating that the assessee held the capital asset from 29/1/1993, then, naturally in determining the indexed cost of acquisition under Section 48 of the Act, the assessee must be treated to have held the asset from 29/1/1993 and accordingly the cost inflation index for 1992-93 would be applicable in determining the indexed cost of acquisition. 18) If the argument of the revenue that the deeming fiction contained in Explanation 1 (i)(b) to Section 2( 42A) of the Act cannot be applied in computing the capital gains under Section 48 of the Act is accepted, then, the assessee would not be liable for long term capital gains tax, bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted by considering that the assessee held the said asset from the date it was held by the previous owner and the same analogy has also to be applied in determining the indexed cost of acquisition. In arriving at the indexation, the first year in which the asset were held by the previous owner would be the first year for which the said asset was held by the assessee. Hence, the action of the Assessing Officer of computing the indexed cost of acquisition with reference to the year in which the assessee became the owner of the assets in question cannot be upheld: Since, the properties in question were acquired. by the assessee by way of gift and will, while computing the capital gains arising on the transfer of the capital assets in question, the indexed cost of acquisition has to be computed with reference to the year in ;which the previous owner first held the assets. The assessee has claimed that the previous owner of the assets in question first held the assets prior to 1981 -82. However, the assessee has submitted in the course of the appellate proceedings that Nisha Sakraney have gifted her 50% share in the properties in question to Subhash Sakraney on 30/05/1995 which was sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... base year should have been taken as 2004-05, when the assessee became the owner. The ld. Assessing Officer, therefore, worked out the long term capital gains by taking the indexed cost for the financial year 2004-05 as against the indexation for financial year 1981-82 resulting into capital gains at Rs. 2,34,92,236/- against the long term capital gains of Rs. 1,51,58,752/-, declared by the assessee. We find that identically the Tribunal in the case of Mrs. Pushpa Sofar vs ITO and DCIT vs Manjula J. Shah (Special Bench) deliberated upon the issue and decided in favour of the assessee. The decision of the Special Bench in the case of Manjula Shah was affirmed by Hon'ble Jurisdictional High Court in 16 taxman. com 42. Identically, vide order dated 24/04/2011 in Jayesh Sheth vs ITO, ITA No.3584/Mum/2010, it was held that for acquisition of property by inheritance, the decision of the Special Bench in Manjula Shah shall apply. In another decision, the Hon'ble High Court of Bombay in CIT vs Smt. Nita Kamlesh Tanna (2014) 220 TAXMAN 165 (Bom.) while interpreting section 48 of the Act and computation of capital gains (cost inflation index), wherein the assessee inherited property from his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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