Direct Tax - Capital Gain

previous owner...

 BY TAKING DATE OF ACQUISITION OF PERVIOUS OWNER

sorry but i dont agree period holding of previous owner is taken in to account but indexing will be available from the year first held by assessee and not from the date held by previous owner.

plz correct me if i am wrong....

cost of acquisition ll be taken of dat of previous owner bt same ll b indexed by taking CII of P.Y. in wch such asset is first held by d assessee.

agree with sumit

"COST TO THE PREVIOUS OWNER AS WELL AS DATE OF ACQUISITION BY THE PREVIOUS OWNER WILL BE TAKEN.& INDEXATION BENEFIT IS AVAILABLE FROM THE DATE OF ACQUISITION BY THE PREVIOUS OWNER."

THIS IS THE VIEW OF INSTITUTE AND IS AFFIRMED BY CHANDIGARH TRIBUNAL IN CASE OF MRS PUSHPA SOFAT v/s ITO 81 ITD(1) . RECENTLY THE SPECIAL BENCH OF MUMBAI TRIBUNAL HAS AFFIRMED THE ABOVE POSITION.

THEN WHAT ABOUT THIS CASE LAW

PLZ TELL ME WHETHER THIS CASE LAW IS RELEVANT FOR NOV 2010 EXAM

Indexed cost of gifted assets has to be determined with reference to previous owner.{ DCIT vs.Manjula Shah (ITAT Mumbai Special Bench) }

The assessee transferred a capital asset which was received by her by way of gift on 1.2.2003. The previous owner had acquired the capital asset on 29.1.1993. In computing capital gains, the assessee claimed that the indexed cost of acquisition had to be worked out by taking the date of acquisition by the previous owner. The AO rejected the claim though the CIT (A) accepted it. On appeal by the Revenue, the issue was referred to the Special Bench. HELD by the Special Bench: Explanation (iii) to s. 48 defines the term “indexed cost of acquisition” to mean the amount which bears to the cost of acquisition the same proportion as the …. Cost Inflation Index for the first year in which the asset was held by the assessee …” A literal reading of the provision suggests that one has to go by the year in which the asset was held by the assessee. However, this would be inconsistent with the scheme of the Act as reflected in the definition of “short-term capital asset” in Expl. 1(b) to s. 2 (42A) which provides that the period for which the asset was held by the previous owner also has to be taken into account. It is not logical that the cost of acquisition and the period of holding is determined with reference to the previous owner and the indexation factor is determined with reference to the date of acquisition by the assessee. Such an interpretation will lead to absurdity and unjust results and defeat the purpose of the concept of ‘indexed cost of acquisition’. In accordance with the principles of purposive interpretation of statutes, Expl. (iii) to s. 48 has to be read to mean that the indexed cost of acquisition has to be computed by taking into account the period for which the asset was held by the previous owner.

YOU CAN DEFINATELY USE THIS JUDGEMENT IN YOUR EXAMS.

from  the year in wich assesse  held the asset.but for the improvements indexed cost of improvement will applicable form the period  first assesse  who made improvements
 

PREVIOUS OWNER OF THE PROPERTY

Originally posted by : SUMIT
	SOMEONE PLZ TELL ME WHETHER INDEXED COST OF ACQUISITION IN CASE OF GIFTED CAPITAL ASSETS IS TO BE DETERMINED BY TAKING DATE OF ACQUISITION OF PERVIOUS OWNER OR THE FIRST  YEAR HELD BY ASSESSEE ?

Cost of Acquisition will be of previous owner.

Indexing of Cost will be done with CII of the year in which the assessee got the gift.

YES I AGREEE WITH sUmIt QUOTE, BECAUSE DATE OF ACQUISITION OF PERVIOUS OWNER COST IS TAKEN 4 CALCULATING THE COST OF INDEXATION.

PLS REFER FAMOUSE CASE OF DCIT vs.Manjula Shah, WHICH WILL HELPFUL 2 U.

THANKS 4 SHARING AND BEST OF LUCK

In case of gift as per amendments...Its COA is determined as per sec 49(4)...and  period of holding of previous owner is also not considered...Indexation is always done from the period when the capital asset is first aquired by the assesee no matter whether the POH of previous owner taken or not...!!

Miss prachi cost to the previous owner as well as period of previous owner is definately considered. And indexation benefit is available from the date the asset was held by the previous owner & not the date when the asset  was first held by the assesse. AS PER MUMBAI ITAT JUDGEMENT.