Indexation Benefit Allowable Based on Cost of Acquisition of Property Sold by Taxpayer: ITAT

The ITAT has ruled that the benefit of indexation for capital gains tax purposes is based on the cost of acquisition of the property sold by the taxpayer. Indexation allows taxpayers to adjust the cost of acquisition of an asset to account for inflation, reducing the taxable capital gains. In this case, the tribunal emphasized that indexation benefits should be calculated using the cost of acquisition of the property, and not the fair market value or any other value at the time of sale. This approach ensures that taxpayers receive appropriate relief from inflation effects on their capital gains, aligning with the objective of equitable taxation.