The Income Tax Appellate Tribunal (ITAT), Cuttack Bench has held that indexation of Cost of Acquisition of property is available for the purpose of computation of Long Term Capital Gain (LTCG) from the assessment year (AY) in which consideration is fully paid by the assessee.
The appeal was filed by the assessee Abani Pattanayak against the order of the Commissioner of Income Tax (Appeals) (CIT(A)), Kolkata arising out of the order passed by the Assistant Commissioner of Income Tax (ACIT), International Taxation, Bhubaneswar.
The assessee submitted that the indexation cost of acquisition shall be available from the AY 2007-2008 since he had paid in full the consideration for the purchase of property before the year ending 31st March 2007 itself.
The Revenue, represented by Kishore Ch. Mohanty submitted that even though the consideration payments with respect to the purchase of the property by the assessee are done before the year ending 31st March 2007, the registration has been made only in the next financial year 2007-2008. So, indexation shall be allowed from the AY 2008-2009 relevant to the financial year (FY) 2007-2008.
The single bench of Shri. George Mathan (Judicial Member) observed that as per the assessment order itself, the full amount with respect to the cost of acquisition has been paid by the assessee before the year ending 31st March 2007.
Once the amount has fully been paid as on the year ending, as per Section 2(47)(v) of the Income Tax Act, 1961, as part performance as required from the side of the assessee, has fully been complied with being the payment of consideration, the indexation would be available to the assessee from the AY 2007-2008 relevant to the FY 2006-2007, the bench further observed.
Indexed cost, being the cost of acquisition of the property based on the inflation rate, shall be considered for calculating LTCG on the sale of property under the Act, the bench held.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
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