SOMEONE PLZ TELL ME WHETHER INDEXED COST OF ACQUISITION IN CASE OF GIFTED CAPITAL ASSETS IS TO BE DETERMINED BY TAKING DATE OF ACQUISITION OF PERVIOUS OWNER OR THE FIRST YEAR HELD BY ASSESSEE ?
15 Replies
NANDINI MASAND
(learner )
(330 Points)
Replied 23 October 2010
BY TAKING DATE OF ACQUISITION OF PERVIOUS OWNER
kuldeep sharma
(article)
(40 Points)
Replied 23 October 2010
sorry but i dont agree period holding of previous owner is taken in to account but indexing will be available from the year first held by assessee and not from the date held by previous owner.
plz correct me if i am wrong....
Sumit Grover
(Chartered Accountant )
(3652 Points)
Replied 23 October 2010
cost of acquisition ll be taken of dat of previous owner bt same ll b indexed by taking CII of P.Y. in wch such asset is first held by d assessee.
rahul gupta
(CA FINAL STUDENT)
(38 Points)
Replied 23 October 2010
"COST TO THE PREVIOUS OWNER AS WELL AS DATE OF ACQUISITION BY THE PREVIOUS OWNER WILL BE TAKEN.& INDEXATION BENEFIT IS AVAILABLE FROM THE DATE OF ACQUISITION BY THE PREVIOUS OWNER."
THIS IS THE VIEW OF INSTITUTE AND IS AFFIRMED BY CHANDIGARH TRIBUNAL IN CASE OF MRS PUSHPA SOFAT v/s ITO 81 ITD(1) . RECENTLY THE SPECIAL BENCH OF MUMBAI TRIBUNAL HAS AFFIRMED THE ABOVE POSITION.
SUMIT
(CA)
(46 Points)
Replied 23 October 2010
THEN WHAT ABOUT THIS CASE LAW
PLZ TELL ME WHETHER THIS CASE LAW IS RELEVANT FOR NOV 2010 EXAM
Indexed cost of gifted assets has to be determined with reference to previous owner.{ DCIT vs.Manjula Shah (ITAT Mumbai Special Bench) }
The assessee transferred a capital asset which was received by her by way of gift on 1.2.2003. The previous owner had acquired the capital asset on 29.1.1993. In computing capital gains, the assessee claimed that the indexed cost of acquisition had to be worked out by taking the date of acquisition by the previous owner. The AO rejected the claim though the CIT (A) accepted it. On appeal by the Revenue, the issue was referred to the Special Bench. HELD by the Special Bench: Explanation (iii) to s. 48 defines the term “indexed cost of acquisition” to mean the amount which bears to the cost of acquisition the same proportion as the …. Cost Inflation Index for the first year in which the asset was held by the assessee …” A literal reading of the provision suggests that one has to go by the year in which the asset was held by the assessee. However, this would be inconsistent with the scheme of the Act as reflected in the definition of “short-term capital asset” in Expl. 1(b) to s. 2 (42A) which provides that the period for which the asset was held by the previous owner also has to be taken into account. It is not logical that the cost of acquisition and the period of holding is determined with reference to the previous owner and the indexation factor is determined with reference to the date of acquisition by the assessee. Such an interpretation will lead to absurdity and unjust results and defeat the purpose of the concept of ‘indexed cost of acquisition’. In accordance with the principles of purposive interpretation of statutes, Expl. (iii) to s. 48 has to be read to mean that the indexed cost of acquisition has to be computed by taking into account the period for which the asset was held by the previous owner.
rahul gupta
(CA FINAL STUDENT)
(38 Points)
Replied 23 October 2010
YOU CAN DEFINATELY USE THIS JUDGEMENT IN YOUR EXAMS.
sajay kumar
(IPCC STUDENT)
(162 Points)
Replied 23 October 2010
from the year in wich assesse held the asset.but for the improvements indexed cost of improvement will applicable form the period first assesse who made improvements
ABHISHEK ADITYA
(CA Final 1st group cleared)
(213 Points)
Replied 23 October 2010
PREVIOUS OWNER OF THE PROPERTY
CA Himanshu Bansal
(Risk Manager)
(2345 Points)
Replied 23 October 2010
| Originally posted by : SUMIT | ||
 |
SOMEONE PLZ TELL ME WHETHER INDEXED COST OF ACQUISITION IN CASE OF GIFTED CAPITAL ASSETS IS TO BE DETERMINED BY TAKING DATE OF ACQUISITION OF PERVIOUS OWNER OR THE FIRST YEAR HELD BY ASSESSEE ? |
 |
Cost of Acquisition will be of previous owner.
Indexing of Cost will be done with CII of the year in which the assessee got the gift.
swapnil
(CA Final)
(598 Points)
Replied 23 October 2010
YES I AGREEE WITH sUmIt QUOTE, BECAUSE DATE OF ACQUISITION OF PERVIOUS OWNER COST IS TAKEN 4 CALCULATING THE COST OF INDEXATION.
PLS REFER FAMOUSE CASE OF DCIT vs.Manjula Shah, WHICH WILL HELPFUL 2 U.
THANKS 4 SHARING AND BEST OF LUCK
Prachi Jindal
(CA-Article-Final-Student)
(129 Points)
Replied 23 October 2010
In case of gift as per amendments...Its COA is determined as per sec 49(4)...and period of holding of previous owner is also not considered...Indexation is always done from the period when the capital asset is first aquired by the assesee no matter whether the POH of previous owner taken or not...!!
rahul gupta
(CA FINAL STUDENT)
(38 Points)
Replied 24 October 2010
Miss prachi cost to the previous owner as well as period of previous owner is definately considered. And indexation benefit is available from the date the asset was held by the previous owner & not the date when the asset was first held by the assesse. AS PER MUMBAI ITAT JUDGEMENT.
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