Tribunal rules in favor of assessees on Long Term Capital Gain & Inheritance issues for assessment year 2008-09.

The Tribunal allowed the appeals for statistical purposes, ruling in favor of the assessees on the issues of Long Term Capital Gain, Inheritance, Cost of Acquisition, and Capital Gains Computation for the assessment year 2008-09. The Tribunal directed the Assessing Officer to determine the cost of acquisition based on fair market value as of 01.04.1981 or accept the valuation report provided by the assessee, emphasizing that consideration for surrendering inherited rights falls under capital gains tax.

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Issues:
- Appeal against CIT(A) orders for A.Y 2008-09 by two different assessees involving common issues.

Analysis:
1. Long Term Capital Gain and Inheritance:
- The AO observed Rs.85 lacs claimed as inheritance was actually compensation for surrendering property rights.
- AO concluded the amount was taxable as capital gains, adding it as Long term capital gain.
- Assessee argued the amount was received under grandfather's will, not surrender.
- CIT(A) upheld AO's decision, stating the assessee failed to prove inheritance.
- Tribunal found the property was inherited, directing AO to determine the cost of acquisition as on 01.04.1981.

2. Cost of Acquisition and Capital Gains Computation:
- Assessee claimed proportionate Cost of Acquisition, but AO denied considering it a surrender.
- CIT(A) agreed with AO, stating no acquisition cost since it was a surrender.
- Tribunal disagreed, holding the transaction involved capital gains tax liability.
- Directed AO to determine the cost of acquisition based on fair market value as on 01.04.1981 or accept the valuation report provided by the assessee.

3. Legal Interpretation and Decision:
- Tribunal emphasized that if the consideration was for surrendering inherited rights, it falls under capital gains tax.
- Rejected AO's stance on nil cost of acquisition, directing a proper determination based on valuation.
- Held that the transaction's capital gains tax liability necessitates computation as per law.
- Declared the appeals allowed for statistical purposes, as the issues were resolved in favor of the assessees.

This detailed analysis highlights the key legal arguments, interpretations, and decisions made by the Tribunal regarding the Long Term Capital Gain, Inheritance, Cost of Acquisition, and Capital Gains Computation issues raised in the appeals against the CIT(A) orders for the assessment year 2008-09.

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