TMI Blog2015 (10) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... me to assessee by way of settlement since another of property belonging to assessee was sold by her father, then, also it cannot be said that devolution of property in favour of assessee is without any monetary consideration. As could be seen from the facts on record and as well as the recitals in the deed of settlement, part of the subject property was given to the daughter as the property inherited by daughter from her grand father by virtue of a will was sold by her father without her knowledge. Thus, it is to be assumed that settlement of property in favour of assessee by her father was in exchange of property belonging to assessee at Delhi sold by her father without her knowledge. That being the case, it cannot be said that the transfer of property by assessee’s father to his daughter was without any monetary consideration. As can be seen from the mode of computation of capital gain provided u/s 48 of the Act, income chargeable under the head ‘capital gain’ shall be computed after deducting therefrom expenditure incurred wholly and exclusively in connection with such transfer of the asset and secondly, the cost of acquisition of the asset and cost of any improvement thereto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long term capital gain (LTCG). 3. Briefly the facts are, assessee is a non-resident individual. For the AY under consideration, she filed her return of income on 31/07/07 declaring total income of ₹ 12,97,900. Though, assessee during the year had computed capital gain, but, she claimed exemption u/s 54EC of the Act for an amount of ₹ 90,00,000. During the assessment proceeding, it was noticed by AO that assessee in the relevant PY has sold a house property bearing house No. 8-2- 293/82/2/31A/A, MLA Colony, Road No. 12, Banjara Hills, Hyderabad, for a total consideration of ₹ 1,25,00,000. However, in the computation of total income filed along with the return of income, assessee has computed LTCG at ₹ 87,22,118 after claiming deduction towards cost of acquisition and cost of improvement of an amount of ₹ 37,77,882. At the same time, assessee also claimed exemption of capital gain having made investment u/s 54EC of the Act of an amount of ₹ 90,00,000. AO called upon assessee to furnish the details of property sold as well as claim of cost of acquisition and cost of construction. In response, it was submitted by assessee that she had inherited t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty in her name, the cost of acquisition has to be taken as Nil . As far as cost of construction is concerned, ld. CIT(A) observed that since assessee failed to produce any evidence to show incurring of any expenditure towards improvement of the property apart from normal repair, no deduction on that account can be allowed. Accordingly, he confirmed the computation of capital gain by AO. 5. Ld. AR explaining the facts submitted before us, assessee s grand father has executed a will on 10/07/97 bequeathing a property at Delhi in favour of assessee. However, assessee s father without her knowledge disposed of the property. Therefore, since the property belonging to his daughter was sold by him, father out of natural love and affection gifted a part of the property belonging to him through deed of settlement. Ld. AR referring to the provision contained u/s 49 of the Act submitted, since the property devolved upon assessee on account of natural love and affection of father towards her, the cost of acquisition of the property has to be taken to be the cost for which her father acquired the property. As far as the cost of improvement is concerned, ld. AR referring to the deed of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, as can be seen from the terms of the deed of settlement, the property given by father of assessee to her was out of natural love and affection and without any monetary consideration. That being the case, it cannot be said that it is not a gift so as to come within the purview of section 49 of the Act. Though, the property might have been given to assessee under a document termed as deed of settlement, but, the recitals in the deed to the effect that property was given out of natural love and affection and without monetary consideration suggest that it is in the nature of gift by father to a daughter. That being the case, the cost of acquisition to the previous owner i.e. father shall be deemed to be the cost of acquisition to assessee in terms of section 49 of the Act. 7.1 Even otherwise also, if we accept the contention of ld. DR that the property came to assessee by way of settlement since another of property belonging to assessee was sold by her father, then, also it cannot be said that devolution of property in favour of assessee is without any monetary consideration. As could be seen from the facts on record and as well as the recitals in the deed of settlement, part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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