TMI Blog2005 (10) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... f became property of the HUF prior to that date and hence, in our considered opinion, learned CIT(A) was not justified in holding that the assessee is entitled to adopt market value of the flat as on 1-4-1981. It can be seen that the capital asset i.e., flat in the present case should have become the property of the previous owner before 1-4-1981 to make the assessee entitled for this benefit i.e., adopting market value as on 1-4-1981 but since, in the present case, flat was not even in existence till 1988, the assessee cannot be given this benefit. In our considered opinion till 1988, the previous owner i.e., HUF was not owner of the flat but was owner of right to get possession and title of the flat. In view of the above, the first issue i.e., whether the assessee can be given benefit to adopt market value of the flat is decided against the assessee and order of learned CIT(A) is reversed and that of the Assessing Officer is restored to this extent. Regarding the second issue, i.e., from which year the assessee should be entitled for indexation, we find that the Assessing Officer has adopted the financial year 1991-92 i.e., year in which, partition of HUF took place. Admittedly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t value of the flat as on 1-4-1981 should be adopted and indexation should be allowed from 1-4-1981. This claim of the assessees was not accepted by the Assessing Officer and he computed capital gain by considering cost of acquisition at Rs. 11,05,643 and he granted indexation from financial year 1991 -92 i.e., first year in which, asset was held by these assessees on partition of HUF. On appeal, it was held by learned CIT(A) that the assessees are entitled to adopt cost or the fair market value as on 1-4-1981 having acquired a capital asset prior to the said date on 16-3-1981 and regarding indexation also; it was held by him that the assessees are entitled for indexation not from the date of partition of HUF but from the date of acquisition of the property by the HUF; and now, the revenue is in appeal before us. 4. It was submitted by learned DR of the revenue that page Nos. 15 to 22 of the paper book contains, an agreement dated 16-3-1981 and our attention was drawn to the second para on page No. 17 of the paper book, as per which, it is clear that a Society is constructing a building and hence, building was not completed on the date of agreement. It was submitted that page Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding the asset from financial year 1991-92 when the partition of the HUF took place and hence they are entitled to indexing only from financial year 1991-92 as per this Explanation. Regarding section 49, it was submitted that section 49 deals with amount of cost with reference to certain mode of acquisition and not the date from which indexing is to be allowed. Regarding Explanation 1(b) to section 2(42A), it was submitted that the period of holding by the previous owner has to be considered for the purpose of deciding as to whether asset is a short-term capital asset or long-term capital asset; but the same cannot be considered for the purpose of indexing as per Explanation (iii) to section 48. Assessment order was strongly supported and it was submitted that the order of learned CIT(A) should be reversed and that of the Assessing Officer should be restored. 5. As against this, it was submitted by learned AR of the assessee that since, HUF acquired property on 16-3-1981, as per the provisions of section 55(2)(b)(ii), the assessee is entitled to adopt market value of the flat as on 1-4-1981. It was submitted that HUF became owner of the shares in the Society on 12-11-1981 and as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to the flat itself because in the present case, flat was transferred and not right to obtain title to the flat was transferred. Judgment of Hon'ble Apex Court rendered in the case of Alapati Venkataramiah relied upon by learned DR of the revenue supports the case of the revenue because it was held in that case that even delivery of possession of immovable property could not by itself be treated as equivalent to the conveyance of the immovable property and since, the sale deed in that case was executed after 1-4-1948, it was held that no capital gain arose in assessment year 1948-49, previous year of which has ended on 31-3-1948. Judgment of Hon'ble Delhi High Court in the case of Mercury General Corpn. (P.) Ltd. relied upon by learned DR of the revenue also supports the case of the revenue because it was held in that case that no sale was affected during the previous year because there could be no sale without a duly registered documents. Similarly, it was held by the Hon'ble Apex Court in the case of Nawab Sir Mir Osman Ali Khan relied upon by learned DR of the revenue that for the purpose of wealth tax, the property belongs to the assessee even after receiving full considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below:- "'Indexed cost of acquisition' means an amount which bears to the cost of acquisition the same proportion as cost inflation index for the year in which the asset is transferred bears to the cost inflation index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981, whichever is later." From the above, it can be seen that cost inflation index for the first year in which the asset was held by the assessee has to be considered. In the present case, there is no dispute that the asset in question i.e., flat was held by the assessee only from financial year 1991-92 i.e., when the partition of HUF took place. As per provisions of section 2(42A) read with Explanation 1(i)(b), the period for which the asset was held by the previous owner has to be added to decide as to whether the asset is short-term capital asset or long-term capital asset and since, admittedly, construction of the house was completed in 1988, the asset is a long-term capital asset in view of this Explanation to section 2(42A); but in view of the specific provisions of Explanation (iii) to section 48, indexing has to be allowed from financial year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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