DCIT Vs Aarav Fragrances and Flavors Pvt. Ltd. (ITAT Mumbai)
ITAT Mumbai held that benefit of cost inflation index admissible as per second proviso to section 48 of the Income Tax Act. Accordingly, indexation benefit admissible even in respect of assets held in foreign countries. Provision doesn’t distinguish assets held in India and in foreign countries.
Facts- Revenue has preferred the present appeal against order passed by CIT(A). he only issue in this appeal is whether the Ld. CIT(A) was justified in holding that the assessee is entitled to deduct indexed cost of shares of foreign company while computing the long term capital gain.
Conclusion- Held that the second proviso to section 48 of the Act, which grants indexation benefit, does not distinguish assets into assets held in India and in foreign countries. Accordingly, we are of the view that the assessee cannot be denied benefit of cost inflation index in respect of assets held in foreign countries. Accordingly, we are of the view that the AO was not justified in not granting indexation benefit to the assessee in respect of sale of shares of foreign company. Accordingly, we affirm the order passed by the Ld. CIT(A) on this issue.
