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Holding period of asset acquired without consideration

When 'asset acquired without consideration' is transferred,does the period of holding of previous owner is includable or not??


Nagesh S Hegde

Nagesh S Hegde

CA Inter

11K+

02-Apr-21 20:11

64

Answers (9)

Best Answer

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Yes. Many court verdicts and tax tribunals have held that for gifted or inherited property (capital asset), the period of holding should be considered from the time the previous owner acquired it. Based on such period of holding, an asset would be classified as short term or long term.


sudha reddy

sudha reddy

Moderator

05-Apr-21 15:05

Yes. where an asset is acquired by gift or inheritance, the period of long term capital asset shall be reckoned from the date when the previous owner acquired such asset and the indexation shall be allowed accordingly from the year of acquisition by the previous owner.


sudha reddy

sudha reddy

Moderator

03-Apr-21 17:11

Check the note mentioned here,,here they have not considered period of holding of previous owner

Can you give us the illustration


sudha reddy

sudha reddy

Moderator

03-Apr-21 17:45

Can you give us the illustration

My query is particularly whether to consider the period of holding of previous owner While determining whether the capital gain is long term or short term.

Attachments

b47fb919-cc49-4f98-aedf-e8f4db41c655.jpg


Nagesh S Hegde

Nagesh S Hegde

CA Inter

11K+

03-Apr-21 17:50

Yes. Many court verdicts and tax tribunals have held that for gifted or inherited property (capital asset), the period of holding should be considered from the time the previous owner acquired it. Based on such period of holding, an asset would be classified as short term or long term.

I had attached a icai study mat illustration in this chat earlier where for determining transferred asset as short term or long term they haven't considered period of holding of previous owner..can I conclude that as a error?


Nagesh S Hegde

Nagesh S Hegde

CA Inter

11K+

05-Apr-21 15:13

I had attached a icai study mat illustration in this chat earlier where for determining transferred asset as short term or long term they haven't considered period of holding of previous owner..can I conclude that as a error?

Only when it is a gift/ inheritance then period of holding of previous owner considered. In the given illustration, cash received is specifically given as gift. but Property is not mentioned as gift it is given as received without consideration, so if the assumption is gift then it will include the previous owner holding period to determine the capital gain, if it is not assumed to be a proper gift then previous owner's holding period will not be considered.


sudha reddy

sudha reddy

Moderator

06-Apr-21 13:30

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