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Commissioner Of Income Tax-12 vs Manjula J. Shah(Dead) Through Lrs on 2 September, 2014

13. The controversy in the present case relates to interpretation of Explanation (iii) to Sec.48 of the Act, which defines the expression "Indexed Cost of Acquisition". We find that the issue of allowing indexation on identical facts had come for consideration before the Hon'ble Bombay High Court in the case of CIT Vs. Manjula J.Shah (2012) 204 TAXMAN 691 (Bombay). The question before the Hon'ble Bombay High Court was "While computing the capital gains arising on transfer of a capital asset acquired by the assessee under a gift, whether the indexed cost of acquisition has to be computed with reference to the year in which the previous owner first held the asset or the year in which the assessee became the owner of the asset ?". The facts of the case before the Hon'be Bombay High Court was that in AY 04-05, the assessee had declared total income of Rs. 20,92,400. The said return of income included long-term capital gains arising from the sale of a residential flat bearing No. 1202-A ('capital asset' for short) at Chaitanya Towers, Prabhadevi, Mumbai. The said flat was originally purchased by the daughter of the assessee ('previous owner' for easy reference) on 29th Jan., 1993 at a cost of Rs. 50,48,350.
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