Cost Inflation Indexation in case of Gift, inheritance etc.

 Held in [2012] 18 taxmann.com 261 (Delhi) HIGH COURT OF DELHI Arun ShunglooTrust (13-2-2012): Benefit of indexed cost of inflation is given to ensure that the taxpayer pays capital gain tax on the 'real' or actual gain and not on the increase in the capital value of the property due to inflation; this is the object or purpose in allowing benefit of indexed cost of improvement, even if the improvement was by the previous owner in cases covered by section 49; accordingly, there is no justification or reason to not allow the benefit of indexation to the cost of acquisition in cases covered by section 49; this is not the legislative intent behind clause (iii) of Explanation to section 48 of the Act

The expression 'held by the assessee' used in Explanation (iii) to section 48 has to be understood in the context and harmoniously with other sections; the term 'held by the assessee' should be interpreted to include the period during which the property was held by the previous owner