Capital gain on property received by release deed

It is treated as gift, being from "relative' as per IT act, no capital gains tax liability...... or gift tax liability.

Any transfer of Capital Asset under will or gift won't be treated as "Transfer" for the purpose of calculating Capital Gain Tax as per Sec.47(iii) of the Income Tax Act.

Hence, No Capital Gain would arise to your father.

I have a follow-up question : if the son eventually sells the property within 2 years of the father's release, will his cap gain be treated as short term or long term ?

In case of gifted property, the cost for the purpose of income tax, shall be the taken as the cost that was paid for the property by any of the previous owners.

The profits shall be treated as short-term or long-term, depending on whether the aggregate of holding period of donee as well as that of the previous owner i.e. donor, is more than 24 months or not.

It holds good doing inhertance, i.e. partition of any inherited property; but not after that.