Capital Gains,cost to previous owner u/s 49

Tax queries 7708 views 7 replies

Arka Bose

None

313 Points Joined October 2009

Cost to previous owner,in a nutshell means previous owner who actually paid for that asset.

So my question is suppose B is the son of A who acquired an asset by will after death of A.Now,if B dies and his son C acquires the same asset,and sells it,then what will be the cost of asset?

I was thinking it will the be cost at which A acquires but in the act it says:

49. [(1)] Where the capital asset became the property of the assessee

(i) on any distribution of assets on the total or partial partition of a Hindu undivided family;

(ii) under a gift or will;

(iii) (a) by succession, inheritance or devolution , or

[(b) on any distribution of assets on the dissolution of a firm, body of individuals, or other association of persons, where such dissolution had taken place at any time before the 1st day of April, 1987, or]

(d) under a transfer to a revocable or an irrevocable trust, or

(e) under any such transfer as is referred to in clause (iv) [or clause (v)] [or clause (vi)] [or clause (via)] [or clause (viaa)] [or clause (vica) or [clause (vicb)] of section 47];

[(iv) such assessee being a Hindu undivided family, by the mode referred to in sub-section (2) of section 64 at any time after the 31st day of December, 1969,]

the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner or the assessee, as the case may be.

[Explanation.In this [sub-section] the expression previous owner of the property in relation to any capital asset owned by an assessee means the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in clause (i) or clause (ii) or clause (iii) [or clause (iv)] of this [sub-section].]

So that means cost to A is not applicable here? Please enlighten me,iI am confused.

Replies (7)

A G Vishal Kirthic

Chartered Accoutant

236 Points Joined May 2010

Dear Arka Bose,

It is apparent from the explanation to Section 49 that the previous owner means the person who had actually acquired it. Hence in the above case, cost of acquisition is the cost to A. But the cost of improvement borne by any of the previous owners or the assessee himself can also be taken into consideration.

CS,CA F,Numrologi TusharSampat

CS CA F Numerologist Astrologer Graph

85935 Points Joined May 2010

Originally posted by : Vishal Kirthic
	Dear Arka Bose, It is apparent from the explanation to Section 49 that the previous owner means the person who had actually acquired it. Hence in the above case, cost of acquisition is the cost to A. But the cost of improvement borne by any of the previous owners or the assessee himself can also be taken into consideration.

AGREED.

BUT COST OF IMPROVEMENT BY ANY 1 i.e PREVIOUS OWNER OR CURRENT ONE MADE BEFORE 1.4.81 SHALL BE IGNORED.

Arka Bose

None

313 Points Joined October 2009

Tthe previous owner was B(C's father) who acquired the asset by will which comes under clause (ii),

But in the explanation it says other that these clauses.....this is where i am actually confused.

CA. Roopali Kadam

Jobs on assignment basis.

1481 Points Joined December 2009

for b prev owner is A So for B - cost to A

for c previous owner is b So for C cost to B(ie cost to A)

Sumiti Jain

1364 Points Joined August 2008

Originally posted by : TusharSSampatM.Com CA,CS-FINAL
	Originally posted by : Vishal Kirthic Dear Arka Bose, It is apparent from the explanation to Section 49 that the previous owner means the person who had actually acquired it. Hence in the above case, cost of acquisition is the cost to A. But the cost of improvement borne by any of the previous owners or the assessee himself can also be taken into consideration. AGREED. BUT COST OF IMPROVEMENT BY ANY 1 i.e PREVIOUS OWNER OR CURRENT ONE MADE BEFORE 1.4.81 SHALL BE IGNORED.

CA ADITYA SHARMA

CA IN PRACTICE

16719 Points Joined May 2011

Originally posted by : TusharSSampatM.Com CA,CS-FINAL
	Originally posted by : Vishal Kirthic Dear Arka Bose, It is apparent from the explanation to Section 49 that the previous owner means the person who had actually acquired it. Hence in the above case, cost of acquisition is the cost to A. But the cost of improvement borne by any of the previous owners or the assessee himself can also be taken into consideration. AGREED. BUT COST OF IMPROVEMENT BY ANY 1 i.e PREVIOUS OWNER OR CURRENT ONE MADE BEFORE 1.4.81 SHALL BE IGNORED.