Explanation iii of Section 48 of the ITA states that indexation is available from when the asset was first held by the assessee: For example: Mr. A got a Building as a gift from his father on say 01-04-2000, but his father had procured on say 01-04-1999, so the indexation benefit would be available from the year 2000, it is a funny position i.e. because the asset was gifted and he is allowed his fathers cost but the intermediate period is not available for indexation
(I agree in the case of Manjula Shah it has been stated that indexation is allowed from the date of holding of previous owner)
Now when we come to explanation iv it allows indexation from the year the improvement takes place, say in A's case the improvement took place in 01/04/1995, when his father was the owner, then he will be entitled to indexation from 1995..
Indeed a Funny Computation mechanism and after analyzing the chink also it has till date not been changed...
CAclubindia
