TMI Blog2019 (4) TMI 1510X X X X Extracts X X X X X X X X Extracts X X X X ..... 1981. The first ground of appeal stands allowed. Deduction u/s 54/54F - acquisition of tenancy right - Tenancy rights v/s ownership rights - HELD THAT:- We find that the assessee has not acquired the ownership rights in the new property but merely acquired tenancy right which could not be equated with ownership rights. The conditions of Section 54 as well as Section 54F is that the assessee must purchase or construct the new property within the specified time. The acquisition of tenancy right, in our opinion, do not tantamount to purchase or construction of a new property, in any manner. Therefore, the assessee would not be eligible to claim the aforesaid deduction either u/s 54 or u/s 54F. - I.T.A. No.2801/Mum/2018 - - - Dated:- 23-4- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property. The property was purchased by the father prior to 01/04/1981. The assessee worked out Long Term Capital Gains of ₹ 3,32,561/- against his share in the property and claimed deduction u/s 54 for ₹ 3,55,000/- in view of the fact that it acquired tenancy right in a certain property. However, applying the provisions of Section 50C, the sale consideration was adopted as ₹ 24,28,200/- and assessee s share in the same was worked out to be ₹ 8,04,948/-. The point of first dispute is the fact that the assessee claimed indexation of the cost from financial year 1980-81 since the property was acquired by way of inheritance and the assessee s father had acquired the same prior to 01/04/1981. However, the benefit of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the indexed cost of acquisition. 17) We see no merit in the above contention. As rightly contended by Mr. Rai, learned counsel for the assessee, the indexed cost of acquisition has to be determined with reference to the cost inflation index for the first year in which the capital asset was 'held by the assessee'. Since the expression 'held by the assessee' is not defined under Section 48 of the Act, that expression has to be understood as defined under Section 2 of the Act. Explanation 1(i)(b) to Section 2(42A) of the Act provides that in determining the period 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquired under a gift or will and the capital gains under Section 48 of the Act has to be computed by applying the deemed fiction, it is not possible to accept the contention of revenue that the fiction contained in Explanation 1(i)(b) to Section 2(42A) of the Act cannot be applied in determining the indexed cost of acquisition under Section 48 of the Act. 19) It is true that the words of a statute are to be understood in their natural and ordinary sense unless the object of the statute suggests to the contrary. Thus, in construing the words 'asset was held by the assessee' in clause (iii) of Explanation to Section 48 of the Act, one has to see the object with which the said words are used in the statute. If one read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 48 of the Act has to be read by ignoring the provisions contained in Section 2 of the Act runs counter to the entire scheme of the Act. Section 2 of the Act expressly provides that unless the context otherwise requires, the provisions of the Act have to be construed as provided under Section 2 of the Act. In Section 48 of the Act, the expression 'asset held by the assessee' is not defined and, therefore, in the absence of any intention to the contrary the expression 'asset held by the assessee' in clause (iii) of the Explanation to Section 48 of the Act has to be construed in consonance with the meaning given in Section 2(42A) of the Act. If the meaning given in Section 2(42A) is not adopted in construing the words used i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the ratio of above decision has become final since Special leave Petition [SLP No. 19924/2012] filed by the revenue against the same has recently been dismissed by Hon ble Apex Court. Therefore, we conclude that the benefit of indexation would be available to the assessee from FY 1981-82 on fair market value as on 01/04/1981. The first ground of appeal stands allowed. 4. So far as the question of deduction u/s 54 is concerned, we find that the assessee has not acquired the ownership rights in the new property but merely acquired tenancy right which could not be equated with ownership rights. The conditions of Section 54 as well as Section 54F is that the assessee must purchase or construct the new property within the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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