ITO Vs Smt. Nita Narendra Mulani (ITAT Mumbai)
Section 55(1)(b)(2)(ii) of the Act provides that where the capital asset became the property of the assessee by any of the modes specified under Section 49(1) of the Act, not only the cost of improvement incurred by the assessee but also the cost of improvement incurred by the previous owner shall be deducted from the total consideration received by the assessee while computing the capital gains under Section 48 of the Act. The question of deducting the cost of improvement incurred by the previous owner in the case of an assessee covered under Section 49(1) of the Act would arise only if the period for which the asset was held by the previous owner is included in determining the period for which the asset was held by the Therefore, it is reasonable to hold that in the case of an assessee covered under Section 49(1) of the Act, the capital gains liability has to be computed by considering that the assessee held the said asset from the date it was held by the previous owner and the same analogy has also to be applied in determining the indexed cost of acquisition.
FULL TEXT OF THE ITAT JUDGMENT
1. This appeal by Revenue is directed against the order of ld. Commissioner of Income-tax-57, Mumbai [ld. CIT] passed under section 143(3) dated 23.11.2015 for Assessment Year 2011-12. The Revenue has raised the following grounds of appeal:
