# Inherited property Capital Gain Calculation

By | July 29, 2015

# Question : How to Calculate Capital Gain in case of inherited property ?

## Answer : Capital gain in case of inherited property is to be computed by taking CII of the year in which asset is acquired by previous owner

As per section 49 where capital asset became property of assessee by succession or inheritance, then cost of acquisition of said asset shall be deemed to be cost for which previous owner of said property has acquired it

In this case, the assessee, had acquired this property by inheritance on death of his father who expired on 19-12-1961. If the dates are correct then the index cost of acquisition is required to be adopted as on 1-4-1981

IN THE ITAT AHMEDABAD BENCH ‘D’

Harishkumar Babulal Shah

v.

Income-tax Officer, Ward 10 (3), Ahmedabad

MUKUL KR. SHRAWAT, JUDICIAL MEMBER
AND ANIL CHATURVEDI, ACCOUNTANT MEMBER

IT APPEAL NO. 1607 (AHD.) OF 2013
[ASSESSMENT YEAR 2009-10]

MARCH  25, 2015

Section 49 of the Income-tax Act, 1961 – Capital gains – Cost with reference to certain modes of acquisition (Inheritance) – Assessment year 2009-10 – Whether as per section 49 where capital asset became property of assessee by succession or inheritance then cost of acquisition of asset shall be deemed to be cost for which previous owner of property had acquired it – Held yes [Para 9] [In favour of assessee/Matter remanded]

#### FACTS

 ■ The assessee had inherited a property, along with his two brothers, after death of his father ‘R’. He acquired 1/6th share of said property. The property was sold jointly by all the members of assessee’s family (HUF). ■ The Assessing Officer opined that 1/6th undivided share in the property in question was first held by the assessee on 19-2-2004 on the death of his one of his brother. As such the index cost of inquisition was to be taken at to 463 which is being notified by the Central Government for every year under clause (v) of the Explanation to section 48 as against 100 shown by the assessee. Therefore, he determined the cost of acquisition adopting cost inflation index of year 2004 i.e.for 463 with respect to section 48(iii). The Assessing Officer made addition of Rs. 11.7 lakhs as LTCG in hands of the assessee. ■ The assessee submitted that the property was not acquired in the year 2003 but it was acquired way back after the death of his father in 1961, hence, the cost of acquisition index as on 1-4-1981 was to be applied by the Assessing Officer. ■ The Commissioner (Appeals) confirmed Assessing Officer’s order. ■ On appeal:

HELD