TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 154
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....13,45,711 and income from other sources at Rs. 3,85,142. The assessee acquired the property under the will dated August 24, 1994, executed by her husband who died on February 22, 2006. Subsequently, the assessee obtained probate from the City Civil Judge, Bangalore, under the order dated October 30, 2006. The husband of the assessee had acquired the property prior to April 1, 1981, and the assessee opted the date as April 1, 1981, to arrive at fair market value ("FMV") for the purposes of arriving at cost of acquisition. But, the Assessing Officer rejected the date, i.e., April 1, 1981, opted by the assessee and the Assessing Officer took October 30, 2006 for arriving at the cost of acquisition. Further, the assessing authority disallowed deduction under section 54F of the Income-tax Act, 1961 ("the Act" for short) on the ground that the assessee purchased the property vide sale deeds dated September 10, 2008 and November 20, 2008, however, the construction of the flats have not been completed when the purchase was made under the said sale deeds. Further, it observed that the construction was completed and the flats were handed over to the assessee only on March 23, 2011. Moreover ....
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....xation of cost of acquisition which only arises in case of long-term capital gain ? 2. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that while computing the capital gain arising on transfer of capital assets which was acquired by the assessee under a will, the indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the assets and not the year in which the assessee became the owner of the assets ? 3. Whether, on the facts and in the circumstances of the case and in law, the Tribunal has failed to appreciate the fact that the indexed cost of acquisition has been defined by Explanation (iii) of section 48 which means an amount which bears to the cost of acquisition the same proportion as the cost inflation index for the year in which assets is transferred bears to the cost inflation index for the first year in which the assets was held by the assessee of the year beginning on the first day of April, 1981 whichever is later ? 4. Whether, on the facts and in the circumstances of the case and in law, the Tribunal has failed to appreciate the fact that the capital ass....
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....f the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee as the case may be." From the above provision, it could be made out that cost of acquisition of asset be calculated on the basis of the cost of acquisition by previous owner. 7. In the case on hand, the assessee acquired the property through the will, which was probated on October 30, 2006. The will was executed by the husband of the assessee, who died on February 22, 2006. The husband of the assessee had acquired the property prior to April 1, 1981, as such, the assessee had opted April 1, 1981 for arriving at the cost of acquisition. This issue is answered by this court in the case of CIT v. Smt. Daisy Devaiah [2014] 227 Taxman 153 (Karn) (Mag.), wherein at paragraphs 8 and 9 this court has held as follows : "8. Section 49 deals with the cost with reference to certain modes of acquisition. One such mode is, if the assessee acquires a capital asset by way of succession, inheritance or devolution, then the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased....
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.... in her favour on September 10, 2008 and November 20, 2008. This aspect of the matter is also dealt with in Sambandam Udaykumar (supra), wherein at paragraphs 10 and 11, this court has held as follows (page 394 of 345 ITR) : "A reading of the aforesaid provision makes it very clear that if a capital gain arises from the transfer of any long-term capital asset, not being a residential house and the assessee has within the period of one year before or two years after the date on which transfer took place purchased or has within a period of three years after that date constructed a residential house, if the cost of the new asset is not less than the net consideration in respect of the original asset the whole such capital gain shall not be charged under section 45 of the Act. However, if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to be whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration shall not be charged under section 45 of the Act. Section 45 of the Act makes it very clear that any profits or gains arising from the transfer of a capital....