Tribunal rules on indexation benefit for long term capital gain & sec. 54 deduction in property case.

The Tribunal held that indexation benefit for long term capital gain should be calculated from the fair market value of the asset as of 1.04.1981, including the period of holding by the previous owner. Regarding the deduction under sec. 54 for investment in residential property jointly held by the assessee and his wife, the Tribunal upheld the decision allowing the full deduction as the entire amount was invested by the assessee, despite the property being jointly held. The revenue's appeal was dismissed.

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Issues:
1. Benefit of indexation for long term capital gain.
2. Deduction under sec. 54 for investment in residential property.

Analysis:
1. The first issue pertains to the benefit of indexation for long term capital gain. The Assessing Officer (AO) contended that the indexation benefit should be allowed from the date the assessee first held the property, while the assessee claimed indexation from the year it was acquired by the 1st owner. The AO computed the cost of acquisition differently, relying on a previous ITAT decision. However, the CIT(A) held that the period of holding by the previous owner should be included for indexation calculation. The Tribunal agreed with the CIT(A), citing relevant provisions and a Special Bench decision, concluding that indexation cost should be considered from the fair market value of the asset as on 1.04.1981.

2. The second issue concerns the deduction under sec. 54 for the investment in a residential property jointly held by the assessee and his wife. The AO restricted the deduction to half the amount invested, as the property was jointly held. The CIT(A) noted that the entire amount was invested by the assessee, fulfilling the conditions under sec. 54. The Tribunal further explained that under relevant sections, the income from the property would be assessable in the hands of the assessee, even if jointly held, thereby justifying the allowance of the full deduction. The Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal.

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