Subscribe To Our Newsletter
IMPORTANT: Please add editor@itatonline.info to your contacts to prevent mails from us going into the Spam/ Junk folder

Database of recent & important judgements: Top-notch and busy professionals know that the vital ingredient to success is to be aware of the latest judgements and to be able to retrieve it, when required. The deluge of judgements from the Courts and the Tribunal is making this task more and more difficult. This is creating a sense of insecurity amongst professionals. To assist our professional brethren, we have created a database where one can search for judgements on the basis of Court, Coram, Counsel, Catch Words, Section etc. This is still WIP and there may be several bugs in the system. If you spot any, do report it at editor@itatonline.info. Also, if you have any important judgements to share, do send it to our editorial team at editor@itatonline.info

COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: February 17, 2012 (Date of publication)
AY:
FILE: Click here to download the file in pdf format
CITATION:

Click here to download the judgement (arun_shungloo_indexed_cost_of_acquisition.pdf)


In case of transfer by gift, will, trust, etc indexed cost to be determined with reference to holding by previous owner

The settlor acquired property before 1.4.1981 and he settled in on trust on 5.1.1996. The assessee-trust sold the property and computed the indexed cost of acquisition on the basis that it “held” the property from the time the settlor had held it. The AO accepted that the settlor’s cost of acquisition had to be treated as the assessee’s cost of acquisition but held that the settlor’s period of holding could not be treated as the assessee’s period of holding. This was upheld by the Tribunal. On appeal by the assessee to the High Court, HELD reversing the Tribunal:

The department’s contention that in a case where s. 49 applies the holding of the predecessor has to be accounted for the purpose of computing the cost of acquisition, cost of improvement and indexed cost of improvement but not for the indexed cost of acquisition will result in absurdities. It leads to a disconnect and contradiction between “indexed cost of acquisition” and “indexed cost of improvement”. This cannot be the intention behind the enactment of s. 49 and the Explanation to s. 48. There is no reason why the legislature would want to deny or deprive an assessee the benefit of the previous holding for computing “indexed cost of acquisition” while allowing the said benefit for computing “indexed cost of improvement”. The benefit of indexed cost of inflation is given to ensure that the taxpayer pays capital gain tax on the “real” or actual “gain” and not on the increase in the capital value of the property due to inflation. The expression “held by the assessee” used in Explanation (iii) to s. 48 has to be understood in the context and harmoniously with other Sections and as the cost of acquisition stipulated in s. 49 means the cost for which the previous owner had acquired the property, the term “held by the assessee” should be interpreted to include the period during which the property was held by the previous owner (CIT v. Manjula J. Shah 16 Taxman 42 (Bom) followed).

Leave a Reply

Current ye@r *


If you are a tax professional, you must sign up for our free newsletter. Why? Because we keep you informed about the latest developments in the world of tax. We focus only on the most important must-read judgements & articles that will impact your day-to-day professional work. You can see a chronological listing of all our postings on twitter & facebook


IMPORTANT: After signing up & clicking on the confirmation mail, send a test/ blank mail to editor@itatonline.info. Why? Because it is the easiest way to add our email address to your address/ contacts book and ensure that our Newsletter does not get sent to the Spam/ Junk folder


Email



Unsubscribe