2017 (8) TMI 524

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....Officer to re-compute the capital gains by adopting year for the indexed cost of acquisition of the capital asset in question with reference to the year in which the previous owner first held the assessee and not the first year in which the asset was held by the assessee." 3. None appeared on behalf of the assessee eventhough notices were duly sent. We, therefore, decided to dispose off the appeal after hearing the learned D.R. After hearing the learned D.R. and going through the orders of the authorities below we noted that the only dispute arising in this appeal relates to the determination of indexed cost of acquisition. The assessee during the year sold a plot of land on Malabar Hill Division for a consideration of Rs. 54 crores, the ....

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....e appellant became the owner of the subject property by way of nontestamentary succession after demise of his father. It is not in dispute that Late Chandrakant Jhaveri, father of the appellant had purchased the said property prior to 1981. He was expired on 12/03/2005 after which the appellant and other legal heirs became the owners of this property by succession/inheritance. The share of property was sold by the appellant along with the other co-owners in the year 2010. The long term capital gain was calculated by the appellant by taking the cost inflation index for the year 1981-82 i.e. 100. However, the Assessing Officer is of the opinion that the indexed cost of acquisition is to be computed taking the year of acquisition as 2004-05 i.....

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.... since the indeed cost of acquisition as per clause (iii) of the Explanation to section 48 has to be determined with reference to the cost inflation index for the first year in which the asset was held by the assessee and in the present case, as the assessee held the asset with effect from 1-2-2003, the first year of holding the asset would be financial year 2002-03 and, accordingly, the cost inflation index for 2002-03 would he applicable in determining the indexed cost of acquisition [Para 16] There is no merit in the above contention. As rightly contended by the assessee, the indexed cost of acquisition has to be determined with reference to the cost inflation index for the first year in which the capital asset was 'held by the assess....

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....he assessee is deemed to have held the asset from 29-1-2993 and deemed to have incurred the cost of acquisition and accordingly, made liable for the long term capital gains tax. Therefore, when. the legislature by introducing the deeming fiction seeks to tax the gains arising on transfer of a capital asset acquired under a gift or will and the capital gains under section 48 has to be computed by applying the deemed fiction, it is not possible to accept the contention of revenue that the fiction contained in Explanation 1(i)(b) to section 2(42A) cannot he. applied in determining the indexed cost of acquisition under section 48 [Para 18] In the insult, that the Tribunal was justified in holding that while computing the capital gains arisin....