TaxTMI 
TaxTMI 
2012 (3) TMI 256
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....m with regard to benefit of indexation available to him from the year it was acquired by the 1st owner as against the year it was held by the assessee. 2. The Ld. CIT(A) has further erred in allowing deduction u/s 54 in respect of the whole of the amount invested by the assessee in purchase of residential house in the absence of no provision in law to allow deduction u/s 54 to the assessee for the portion of the new residential property owned by his wife." 3. The first issue for consideration relates to deleting the addition made by the Assessing Officer with regard to benefit of indexation. The facts of the case stated in brief are that the assessee declared long term capital gain of Rs. 1,37,02,500/- on sale of residential property ....
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....ion under sec. 54 of the Act in respect of the whole of the amount invested by the assessee in the purchase of residential house. The assessee purchased residential property at C-602, The Residency, Ardee City, Gurgaon in joint name with his wife Smt. Ritu Verma and claimed deduction under sec. 54 of the Act in respect of amount of Rs. 80,00,000/- invested in residential property. However, the AO restricted the deduction under sec. 54 to the extent of Rs. 40,00,000/- as the property was jointly held by the assessee with his wife. 5. Before the CIT(A) it was submitted that the Explanation 1 to sec. 2(42A) for the purpose of determination of period for which any capital asset is held by the assessee in the case of a capital asset which bec....
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....ned AR of the assessee relied on several decisions to support his contention. 6. The learned CIT(A) as regards the first ground of appeal, after considering the submissions made by the assessee, observed that the assessee held the property upon the death of his father with effect from 6.04.1990. Explanation 1 to sec. 2(42A) provides that in determining the period of holding where such an asset was acquired in the circumstances mentioned under sec. 49(1), the period of holding by previous owner shall be included. Since father of assessee acquired the property prior to 1.04.1981 and the period of previous owner was to be included, the learned CIT(A) held that cost inflation index was to be applied with reference to 1.04.1981 and not from t....
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....ife of the assessee who has become the owner of ½ share of the property. Therefore, for all purposes the property owned by her and on later date if the property is sold, the capital gain which should be assessable in the hands of the assessee, would be assessable in the hands of Smt. Ritu Verma. Therefore, the benefit of Rs. 40,00,000/- in the hands of assessee cannot be given. She therefore, supported the order of the AO. 8. We have heard both the parties and gone through the material available on record. U/s 49(1)(iii), where the capital asset became the property of the assessee by succession, inheritance or devaluation, the cost of acquisition of asset shall be deemed to be the cost for which the previous owner of the property ....
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....ah (supra). Respectfully following this decision of Special Bench of the Tribunal, it is held that indexation cost of the asset transferred has to be taken from 1.04.1981and not from the date on which the assessee became owner of the property. Accordingly, we do not find any infirmity in the order passed by the learned CIT(A) holding that benefit of indexation cost will be available to the assessee with reference to fair market value of the asset as on 1.04.1981. 9. As regards second issue, the assessee had invested entire amount of Rs. 80,00,000/- in the new asset and the name of his wife Smt. Ritu Verma has been entered in the sale agreement just for the purpose of security reasons. Under sec. 64(1)(iv) subject to provisions of sec. 27....