TaxTMI 
TaxTMI 
2015 (2) TMI 715
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....tax Act, 1961 (for short hereinafter referred to as "the Act") and grant relief to the assessees. 2. The assessees in these three appeals are individuals. They are the legal heirs of one Mr. C. B. Devaiah. Mr. C. B. Devaiah owned the property which had been acquired by him prior to April 1, 1981. Mr. C. B. Devaiah died on April 23, 2000. His legal heirs sold the property owned by him during the previous year relevant to 2005-06, i.e., on October 18, 2004. The three assessees as legal heirs were entitled to one-fifth share each over the property owned by Mr. C. B. Devaiah. They declared capital gains on sale of the property in their returns of income filed for the assessment year 2005-06. In the computation of capital gains, they adopted ....
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....dingly, the order passed by the assessing authority was revised and the assessing authority was directed to allow the indexation benefit from the financial year 2000-01 only. 3. Aggrieved by the said order, the assessees preferred appeals to the Tribunal. The Tribunal, after hearing both the parties and relying on a judgment of the Bombay High Court in the case of CIT v. Manjula J. Shah reported in [2012] 68 DTR 269 (Bom) ; [2013] 355 ITR 474 (Bom), held that the Commissioner was not justified in not following the decision of the hon'ble Bombay High Court, the ratio of the decision of the Bombay High Court rendered in the context of acquisition of property by way of gift will apply with greater force when property devolves by success....
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.... for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessees, as the case may be, if the acquisition is by way of succession, inheritance or devolution. If, cost of acquisition is to be computed as on the day the previous owner held the property on April 1, 1981, though the assessees acquired the said property by way of succession, indexed cost of acquisition is to be allowed from the day the property was owned by the previous owner and not when the assessees held the property after his death and that is the ratio decided by the Bombay High Court in the aforesaid judgment and, therefore, he submits no case for interference is mad....
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....long-term capital gains arises from the transfer of a long-term capital asset, the cost of acquisition of the asset has to be read as "indexed cost of acquisition". Indexed cost of acquisition has been defined in the Explanation to the said section, it means an amount which bears to the cost of acquisition the same proportion as the 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 assessees or for the year beginning on the 1st day of April, 1981, whichever is later. Section 49 deals with the cost with reference to certain modes of acquisition. One such mode is if the assessees acquires a capital asset by way of succession, inheritan....