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Facts
The Assessing Officer (AO) computed the long-term capital gain by using the indexation for the year 1996-97 instead of the correct year 1985-86. This resulted in an addition of Rs. 2,16,465/- to the assessee's income. The assessee argued that the property was inherited, and indexation should be from the year they first held the property, which was 1985-86.
Held
The Tribunal held that the assessee had rightly indexed the cost of acquisition from the year 1985-86, as the property was received through inheritance via a will from the earlier owner.
Key Issues
Correct year for indexation of cost of acquisition for inherited property when computing capital gains.
Sections Cited
143(3)
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Income Tax Appellate Tribunal, SURAT “SMC” BENCH, SURAT
Before: DR. B.R.R. KUMAR, VICE- & MS. SUCHITRA KAMBLE
O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER:-
This is an appeal filed against the order dated 03-09-2015 passed by CIT(A), Surat for assessment year 2005-06.
The assessee sold the property in which his share was ¼ amounts to Rs. 22,79,776/-. The stamp valuation authority valued the property at Rs.68,38,000/-. The A.O. while computing the long term capital gain held that the indexed cost for the year was 1996-97 in place of year 85-86 which is a correct year of indexation. Consequently, the A.O. made addition of Rs. 2,16,465/-. The ld. A.R. submitted that the CIT(A) is not right in confirming the year of cost of acquisition 1996-97 as against claim of assessee i.e. 1985-86. The ld. A.R. submitted that the assessee has given the details related to the calculation taking the Adil Noshirvan Shethna Vs. ITO Asst. Year : 2005-06 - 2– cost of inflation index for the year in which the assesse first time held a property. The assessee received the said property after death of the earlier owner of the land as one of the heirs through will and therefore we hold that the assesse has rightly indexed cost of indexation from the year 1985-86.
In the result, the appeal of the assesse is allowed.
The order is pronounced in the open Court on 23.01.2026