Query Regarding Capital Gains Computation and Cost of Acquisition under Section 49 of the Income Tax Act
A father, Mr. X, gifted a property to his son, Mr. Y, transferring 100% ownership. Subsequently, one year later, Mr. Y gifted 50% of the same property to his wife, Mrs. Y.
Now, during the event of selling the property, Mr. Y plans to compute his capital gains by considering 50% of the cost of acquisition under his own ownership, as per the provisions of Section 49 of the Income Tax Act.
The question arises regarding the computation of capital gains for Mrs. Y:
Since Mrs. Y acquired her share of the property as a gift from Mr. Y, can she adopt the cost of acquisition of the previous owner before Mr. Y (i.e., Mr. X) for her 50% share? The explanation under sub-section (1) of Section 49, which refers to the "last previous owner," appears unclear in this context.
Can someone clarify how the cost of acquisition should be determined for Mrs. Y when computing her capital gains, considering the relationship between the transferors?
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