|Question And Answer
|Advocate Shashi Ashok Bekal
|Capital Gains, indexation
|November 3, 2022
As section 45(5A) talks of deferment of capital gains to the year in which Completion Certificate is issued, whether the analogy laid down by the hon’ble Bombay High Court in CIT v. Manjula J. Shah’s case (2016) 355 ITR 474 (Bom) should be applicable .
In case of section 45(5A), though the provision calls for deferment of tax from the date of actual transfer, still no such specific provision is provided to clarify how the period of holding is to be computed. In the scenario, Whether indexation is only up to the date of transfer or up to the date of issue of completion certificate.
As per section 45(5A) of the Income-tax Act, 1961, the capital gains shall be chargeable to income-tax as income of the previous year in which the certificate of completion for the whole or part of the project is issued by the competent authority; and for the purposes of section 48 of the Act, the stamp duty value, on the date of issue of the said certificate, of his share, being land or building or both in the project, as increased by the consideration received in cash, if any, shall be deemed to be the full value of the consideration (FVOC) received or accruing as a result of the transfer of the capital asset.
As the FVOC is considered as on the date the Completion Certificate is issued. It would be logical to assume that the indexation would be provided up to the date of issuance of Completion Certificate.