period of holding and COA and COI

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CA Anshu Agarwal (Querist)
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12 September 2010 Mr. A acquired a house on 01-05-1998 for Rs.25 lacs.

After Mr. A's death on 17-08-1999, it was given to his son Mr. B. Mr. B incurred a expenditure of Rs.5 lakhs on it improvement on 05-08-2002.

On 04-05-2009, Mr. B gifted this house to his married daughter Mrs. C. She sold this on 06-08-2009.

> for computing period of holding of asset, will period for which asset held be MR.B shall be counted..?

> Will cost of improvement incurred by Mr. B be taken into consideration?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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12 September 2010 1. Yes ,will be counted by virtue of explanation to section 49(1) of the Income tax Act,1961.
2. No, by virtue of section 55(1)(b)(2)(ii) read with explanation to section 49(1) of the said act.

CA Anshu Agarwal

CA Anshu Agarwal (Querist)
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12 September 2010 thanks

the second point is clear to me, as cost of improvement incurred by the previous owner shall be included as per section 55(1)(b)(2)(ii), and as per explanation to section 49(1) previous owner means last previous owner of the property who acquired it otherwise than modes referred to in section 49(1).... So Mr. B is not previous owner for this purpose.

But for first point, i have doubt. As per explanation 1(i)(b) of section 2(42A), the period of holding includes the period of holding by the previous owner.... So, for this purpose also, the period of holding by Mr. B should be excluded...

Plz explain the same to me..

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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13 September 2010 Yes, you are right. I stand corrected to that extent.

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