Capital Gain Tax Query

Indexed COA will be =500000 * 632/582.

ur frends are curct i want to knw vch point is makin u confused here...??????

i mean its clearly mentioned dat if asset is acquired by inheritance dan fr CII the yr fr vch it is frst acquired is to b taken as the year of transfer.

This matter really creates confusion and the legislature hasn't found a way out of it.

The plain wording of the act says that the indexation shall be done from the time the current owner acquires the asset. In this case, it is May 2008. But cost is taken to be as the cost of the previous owner.

Logic points towards indexing with the CII of the yr. to which the COA of previous owner is taken.

The point is contraversial till such time courts approve of any suitable view or suitable amenment is made to the Act.

Recently in the case of  Mrs. Pushpa Sofat vs. ITO 81 ITD (1) by ChandigarhTribunal, it is held that indexation shall be done from the period when previous owner acquired the asset i.e '100' in ur case and the same view is also affirmed by the institute also.

Moreover the benifit given is about the COA and not the CII. CII will automatically apply of that yr. of which cost of acquisition is taken i.e. property purchased b4 1.4.81, it will always be '100'.

 

In any case, if u want to be beyond any contraversy  and at PCC/IPCC level, u can take CII of yr. of which the current assessee acquired the asset. @ final level, u can refer the case as given above and take CII of yr. of previous owner.!!!!!!!!!!!!!!

if we have a bare reading of section 48 which allows indexation it is clearly stated that indexation will be allowed from the year in which the aseesee holds the asset for the first time. So by virtue to this In you case it will be 582. The whole discussion given by aashish is also helpful but as a prudent practise we can not fully imply and rely on a tribunal decision just because it's not solved out yet and we should wait if SC or parliament make a clearer note on it By than following this case might attract objections from AO and the case may be gone into an dispute

Hi,

from a purely academic perspective, for indexation,

take the answer as year of inheritance for PCC - 582 CII because thats all which is expected;

take the answer as 1981 for final - 100 CII

 

The pushpa Sofat case was also relied on in a Mumbai bench Decision in case of Manjula Shah....

The Direct taxes code also points towards admitting a legal anomaly and rectifying the mistake in the light of the decisions giving benefit of holding period to assessee.

 

As pointed out by Ashish, Cost wil be FMV on 01.04.1981

In exams take CII of year in which asset is acquired by previous owner and give note that solution is based on tribunal decision in the case of PUSHPA SOPHAT.Also in RTP institute has taken similar view.

I am satisfied with ashish and G.K as per recent case law you have to taken indexation from 1981 i.e 100 ( which is recently followed by bombay branch in case of manjula shah) if you give answer to your question at this point in exam then pl give the case ref. too and I think DT code is going to rectify this point.

Thanks to all of my friends for spending time for me................and thanks once again for referring case law of tribunal.

This was really a simple question!

Capital gain =

Sales consideration  3500000

- Indexed cost of acquisition 500000*632/582

https://itatonline.org/archives/index.php/dcit-vs-manjula-shah-itat-mumbai-special-bench-indexed-cost-of-gifted-assets-has-to-be-determined-with-reference-to-previous-owner

 

Thanks & Regards

 

Arpit Sharma

Originally posted by : Ritasha
	In exams take CII of year in which asset is acquired by previous owner and give note that solution is based on tribunal decision in the case of PUSHPA SOPHAT.Also in RTP institute has taken similar view.

Miss Ritasha which RTP are you taking about can you pass me one copy of that

Originally posted by : Arpit Sharma
	Hey frnds plz before answering go through the following link https://itatonline.org/archives/index.php/dcit-vs-manjula-shah-itat-mumbai-special-bench-indexed-cost-of-gifted-assets-has-to-be-determined-with-reference-to-previous-owner   Thanks & Regards   Arpit Sharma

 

thanks for the link of the case law.!!!!!!!

Originally posted by : priyanka bathwal
	This was really a simple question! Capital gain = Sales consideration  3500000 - Indexed cost of acquisition 500000*632/582

my dear... its not that simple....

 

@ ritasha

 

which rtp you are talking about.. plz give details

Originally posted by : Harish Suwalka
	Originally posted by : priyanka bathwal This was really a simple question! Capital gain = Sales consideration  3500000 - Indexed cost of acquisition 500000*632/582 my dear... its not that simple....   @ ritasha   which rtp you are talking about.. plz give details

 

The solution was in November 2001 issue of RTP.!!!!!!!!!!!!!!!