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2016 (5) TMI 333 - ITAT CHENNAI

2016 (5) TMI 333 - ITAT CHENNAI - TMI - LTCG - Benefit of Indexation denied - period of holding of previous owner were the property devolved on the assessee and certain modes of acquisition as per section 49(1) - whether holding period of the assessee on whom the assets are devolved on the death of assessee’s father, the provisions of Sections 48 & 49(i) of the Act allow special mode of transfer in gift and succession? - Held that:- The action of the AO that the property was acquired by assessee .....

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see has complied with the conditions of the previous owner as on 01.04.1981 and rightfully claimed the cost in inflation indexation from the base year i.e. 01.04.1981 and the arguments of the ld.A.R are supported by the decision of Co-ordinate Bench of this Tribunal in the case of ITO Vs. Shri Syed Ali Shirazhi [2014 (10) TMI 888 - ITAT CHENNAI] following the decision of Special Bench in the case of Manjula J Shah Vs. DCIT (2009 (10) TMI 646 - ITAT MUMBAI) which has been confirmed by the Hon’ble .....

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ssessee.

Thus we direct the AO to allow the cost inflation indexation to the assessee from 01.04.1981for computation of capital gains. - Decided in favour of assessee - I.T.A.No.86/Mds. /2016 - Dated:- 24-3-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER For The Appellant : Mr. D. Anand, Advocate For The Respondent : Mr. A.V. Sreekanth, JCIT, D.R ORDER PER G.PAVAN KUMAR, JUDICIAL MEMBER: This appeal filed by the Assessee is directed against the o .....

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the assessee is an individual, and filed e-return on 30.09.2011 with total income of ₹ 54,62,079/-. The return was process u/s.143(1) of the Act and ws selected for scrutiny and notice u/s.143(2) was issued to the assessee. The Authorised Representative of assessee appeared from time to time and furnished the details called for during assessment proceedings. The Assessing Officer found that the assessee has disclosed long term capital gains of ₹ 43,72,592/- and income from other sou .....

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adopted Cost of Inflation Index of Financial year 1995-96 and as computed long term capital gains of ₹ 1,41,95,589/-. 3.2 During the course of assessment proceedings, the AO examined the material on record and submissions of ld.A.R ,found that the said property was not inherited and was brought by the assessee s father in the year 1964 as absolute owner. The said property was not transferred till the father s death and the assessee cannot be considered as the owner of the property prior to .....

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nsideration before due date of filing of the return u/s.139(1) on 30.09.2011 in the Capital Gains Savings Scheme. And in the year, 2012, the assessee purchased a residential property on 12.04.2012 for consideration of ₹ 180 lakhs and calculated Nil capital gains. In respect of second property at Cuddalore were land and buildings used for commercial purpose for running cinema theatre was sold by three separate documents as Sl. No. Doc. No. Land Area sq.ft. /value Building Area sq.ft/ value .....

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1.02.1996, the Cuddalore property was devolved on the legal heirs by succession. The assessee sold the property and mother & sister hold equal shares. The sale consideration received for 1/3rd share of the assessee is ₹ 142 lakhs. The assessee calculated the cost of acquisition of the property at 7,97,054/- by adopting the cost of inflation index base as on 01.04.1981. The ld.A.O found that the said property was not inherited property, as the assessee s father and his brothers purchase .....

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/- . The assessee claimed exemption of ₹ 40,52,023/- u/s.54F of the Act in the income returned and because of change of indexation value, the deduction u/s.54F of the Act was recalculated. Due to change in base year, long term capital gains recalculated at 75,06,495/- and subjected to tax. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld.CIT(A). 3.3. In appellate proceedings, the Authorised Representative of assessee appeared on the date of hearing, argued the c .....

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sition in computing the capital gains u/s.48 of the Act and sec.49(1)(ii & (iii)) were the assessee acquired any asset under gift or will, and by succession, inheritance or devolution the cost to acquisition of asset shall be the cost of the previous owner, increased by the cost of improvement borne by the previous owner. The provisions of the section 2(42A)(b) determine the period for which the asset is held by the assessee and the period of holding of the previous owner shall also be inclu .....

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ips held the capital gains arising under a gift, the index cost of acquisition has 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 becomes the owner of the asset. The assessee has become the rightful owner on the demise of his father as a legal heir in 1995-96. Though the property was held by the father from the year1965-66, the provisions of the Act allow the assessee to claim indexation from the period 01.04.1981 .....

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us, ld.A.R reiterated the submissions made in the assessment and in first appellate proceedings on provisions of inheritance, succession and gift. Ld.A.R explained that the property was devolved upon the assessee on succession after death of assessee s father and the index cost of acquisition has to be determined with reference to the cost of inflation index of the first year in which the capital asset was held by the previous owner. The Ld.CIT(A) has erred in distinguishing the decision and ob .....

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rty as on 01.04.1981 and as per the provisions of the section 48 & 49(i) of the Act, the cost of previous owner and holding period has to be considered for indexation and supported with the decision of Bombay High Court in the case of CIT Vs. Manjula J.Shah (supra) and prayed for the deletion of capital gains. Per contra, ld.D.R relied on the order of the lower authorities and vehemently opposed the submissions of ld.A.R. 5. We have heard the rival submissions, perused the material on record .....

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