Urgent query

A K Prashanthi (CA Final) (104 Points)

05 September 2014  
Mr. X gifted his property to Mr. Y in 1996. Mr. Y now intends to sell the same and gift half of the sale proceeds to Mr. X. Would it be beneficial if Mr.Y now gifts half the property back to MR. X and then sell the same so that both of them can index their respective shares of cost of acquisition? In this case though gift is not a transfer as per Capital gains, will tax on gift of half of the property be lower than the tax on cash gift if Mr. Y directly sells the property and shares the proceeds with Mr. X. Mr. X and Mr. Y are not fictitious and this is a real query. Kindly clarify.