TAX CLUB INDIA

My mother purchased a lease hold (property) Land from DDA in Delhi in the year 1965.
She constructed a House on the lease hold land and completed in 1967 .The cost of the property was agreed by IT Dept in 1968. Subsequently under DDA lease hold to free hold conversion scheme, the land was converted to free hold by paying conversion charge to DDA in the year 1995. My mother expired in 1997 and subsequently the property was transferred to my name. The Property was sold in the year 2006.
Taxman is confused to index the value of the Property at 2006 since conversion from lease hold to free hold was done in 1995.

It will be a great help if some one can explain me how to compute cost price 2006 for capital gain calculation.

As per income tax act in case of property is transferred to legal heirs the cost of indexation will be taken from the date of transfer of property so base indexation year will be treated in 1997.capital gain will be calculated as under

........................=sale value(after expenses)
less
.........................=Indexed cost of land /house (519*[a]/331) (note -1)
less
-----------------=indexed cost of additional money (519*[b]/331)
===========
net capital gain
===========

Note: (a) means actual cost at 1965+67 or fair market value as on 01/04/1981

519 = is cost inflation index for year 2006-07
331= is cost inflation index for year 1997-98

(b) means additional value paid for new rights