Opinion Of Eminent Legal Luminaries On Controversial Issues

Capital gains – Computation -Indexation u/s. 48 from which date?

QUERY: Purchase of flat under self finance scheme: An assessee booked a flat with RHB under self financing scheme & paid regular instalments. The flat was booked in 2006 and the amount was paid till 2011. The flat was allotted in 2010 & possession was given in 2011. What will be the date of acquisition & position of indexation of instalment.
ANSWER: Explanation to section 48 of the Act, defines “indexed cost of acquisition” means an amount which bears to the cost of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, 1981 whichever is later.
Since the expression “held by the assessee” is not defined under section 48 of the Act, that expression has to be understood as defined under section 2 of the Act [see CIT v. Manjula J. Shah – 355 ITR 474 (Bom.)].
Now, from the fact, it is clear that though a flat was allotted in 2010 but the possession was given only in 2011. Therefore acquisition of flat would be in 2010 but indexation would be from 2011.

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