25 January 2011
Sir, Actualy there is one concept under income tax act , i.e., Capital Gain. If you held any asset more than 3 years then that asset will be Long Term Capital Asset, subject to certain conditions.
Here, they assume that if you have Value of money changes with the time, say Rs. 100 will be having more value 10 years ago, therefore, to compute correct value of any asset at present time income tax department is using Cost Inflation Index(CII) and every year they are releasing CII for that speciic year.
Here for 2004-05 CII is 480 and 1994-95 CII is 259. So if you want to know that what would be value of any any asset in 2004-05, which has been purchased in 1994-95 then you would use following fourmula:
=purchase value of asset*CII of the year of asset sold/CII of the year of purchase
"Please read Capital Gain Chapter of Income tax for more clarification.
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