Allotment letter alone cannot count as acquisition of a new asset for capital gains relief; loss set-off needs verification.

A mere allotment letter and part payment for a proposed commercial unit, where the asset was not yet in existence and possession, approvals or commencement documents were absent, did not amount to acquisition of a new asset for section 50 capital gains computation; the claimed deduction was therefore disallowed. The issue of set-off of brought forward losses required factual verification on the peculiar record, so it was remanded for fresh adjudication. The capital gains claim based on the proposed gala was sustained as denied, while the loss set-off question was left open for reassessment.

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Issues: (i) Whether the amount paid for a proposed gala, evidenced only by an allotment letter and without actual acquisition or existence of the asset, could be treated as acquisition of a new asset for the purpose of section 50 and allowed in the computation of short-term capital gains. (ii) Whether the issue relating to set-off of brought forward losses required fresh verification.

Issue (i): Whether the amount paid for a proposed gala, evidenced only by an allotment letter and without actual acquisition or existence of the asset, could be treated as acquisition of a new asset for the purpose of section 50 and allowed in the computation of short-term capital gains.

Analysis: The payment was made under an allotment letter for a future commercial unit, with further instalments linked to construction milestones and possession. The asset was not yet in existence, no possession had been taken, and the necessary approvals and commencement documents were not shown. Section 50 is a deeming provision and must be applied strictly within its limited field. A mere allotment or part payment does not amount to acquisition of an asset for the purpose of claiming the stated capital gains benefit.

Conclusion: The claim was rejected and the disallowance was upheld, against the assessee.

Issue (ii): Whether the issue relating to set-off of brought forward losses required fresh verification.

Analysis: Both sides agreed that the question needed examination on the peculiar facts and circumstances, and the matter required verification by the Assessing Officer before a correct determination could be made.

Conclusion: The issue was remanded for fresh adjudication, in favour of the assessee in part.

Final Conclusion: The appeal succeeded only to the limited extent of remand on the loss set-off question, while the denial of the capital gains claim based on the proposed gala was sustained.

Ratio Decidendi: For section 50, a mere allotment letter or part payment for an asset not yet acquired or existing does not justify treatment of that amount as acquisition of a new asset for capital gains computation.

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