In DCIT v. Dinesh Sharma, indexation should be given from the year when the property was acquired by the previous owner for the purpose of computing long Term Capital Gain under the provisions of the Income Tax Act.
The assessee had inherited a property which devolved on the assessee in F.Y.1987-88. The property was acquired by the previous owner in the year 1981-82. The assessee sold the property during the relevant assessment year and the said income was offered to tax as Long Term capital Gain. The Assessing Officer held that the benefit of indexation, for the purpose of computation of long term capital gain, is allowable to the assessee from the F.Y. 1987-88. The assessee claimed that the indexation is allowable from 1981-82, the year in which the previous owner has acquired the property.
The first appellate authority relied on the decision of the Delhi High court in Arun Shungloo Trust CIT [2012] and held in favour of the assessee.
Dismissing the departmental appeal, the bench held that “the order of Ld.CIT(A) on this issue is a well-reasoned order and in accordance with law in the facts and circumstances of this case. Ld. DR has failed to make out a case for any interference with the order of Ld.CIT(A) on this issue. The order of the Ld.CIT(A) is also based on precedent of Hon’ble Delhi High Court in the case of Arun Shungloo Trust (supra). In view of the foregoing, we decline to interfere with the order of the Ld.CIT(A)”
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