MAT Co. entitled to indexation benefit for computing exempted capital gains under Sec. 10(38): ITAT

Facts:

a) The assesse filed return of income under provisions of Section 115JB. The Assessing Officer denied benefit of indexed cost of acquisition for computing exempted capital gains.

b) The Assessing Officer was of the opinion that long term capital gain without indexing the cost of acquisition were to be considered for the purpose of computing tax liability u/s 115JB.

c) The CIT(A) upheld the action of Assessing Officer

The ITAT held in favour of assessee as under:

1) Section 10(38) provides that any income arising from transfer of a long-term capital asset, being equity share in a company or a unit of an equity oriented fund shall be exempt. Therefore, the issue revolves around interpretation of the term 'any income' as used in subsection (38) of section 10 from the transfer of long term capital asset.

2) The term 'any income' used in sub-section (38) of section 10 refers to only the amount of long term capital gains computed under the provisions of section 48 which means that the benefit of indexation of cost of acquisition should be given to the assessee while computing long term capital gain for the purpose of section 115JB of the Act.

3) Therefore, the assessee-company would be entitled to the benefit of indexation while calculating long term capital gains for the purpose of computing tax liability u/s 115JB. - [2016] 76 taxmann.com 360 (Bangalore - Trib.)