Appeal partly allowed on LTCG computation & VAT claim remitted for substantiation. Corrections and re-computation directed.

The Tribunal partly allowed the appeal by upholding the AO's method of computing the indexed cost of acquisition based on actual payment years for Long Term Capital Gains (LTCG). Indexation benefits were allowed for payments made within 36 months before the sale. The issue of non-adjudication of VAT paid on the purchase of the flat was remitted back to the AO for consideration, with instructions for the assessee to substantiate the claim. The Tribunal directed corrections in figures of stamp duty and registration fees and re-computation of income. The order was pronounced on 03rd October 2018.

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Issues Involved:
1. Computation of indexed cost of acquisition for Long Term Capital Gains (LTCG).
2. Direction to Assessing Officer (AO) regarding non-allowance of indexation benefits for specific payments.
3. Non-adjudication of VAT paid on the purchase of the flat.

Issue-wise Detailed Analysis:

1. Computation of Indexed Cost of Acquisition for Long Term Capital Gains (LTCG):
The primary issue contested by the assessee was the method of computing the indexed cost of acquisition for LTCG. The assessee claimed indexation from the Financial Year (FY) 2007-08, when the purchase agreement was registered. However, the AO computed the indexed cost based on the actual years of payment, leading to a higher LTCG. The CIT(A) upheld the AO's computation, referencing the case of Shri Vikas P. Bajaj vs. ACIT, which supported indexation based on actual payment years. The Tribunal, after considering various judicial pronouncements, including the decisions in Ramprakash Bubna and Vikas P. Bajaj, concluded that the indexation benefit should be granted from the year of actual payments. Thus, the Tribunal dismissed Ground Number-1, affirming the AO's method of computation.

2. Direction to Assessing Officer Regarding Non-Allowance of Indexation Benefits for Specific Payments:
The CIT(A) directed the AO not to allow indexation for payments of Rs. 18.32 Lacs and Rs. 13.44 Lacs made in FY 2011-12, as they were within 36 months before the date of sale. The Tribunal found this direction unsustainable, stating that payments made within 36 months before the sale do not alter the nature of the gains, which remain LTCG. Therefore, Ground Number-2 was allowed, and the AO was directed to allow indexation benefits for these payments.

3. Non-Adjudication of VAT Paid on the Purchase of the Flat:
The assessee raised an additional ground regarding the non-adjudication of VAT paid amounting to Rs. 11.35 Lacs. The Tribunal noted that this issue was not considered by the AO or CIT(A). Consequently, the matter was remitted back to the AO to consider the VAT claim, with instructions for the assessee to substantiate the claim. This ground was allowed for statistical purposes. Additionally, the Tribunal directed the AO to correct the figures of stamp duty and registration fees, which were wrongly recorded as Rs. 18.32 Lacs instead of Rs. 18.49 Lacs, and to re-compute the income accordingly.

Conclusion:
The appeal was partly allowed. The Tribunal upheld the AO's method of computing the indexed cost of acquisition based on actual payment years, allowed indexation benefits for payments made within 36 months before the sale, and remitted the VAT claim back to the AO for consideration. The order was pronounced in the open court on 03rd October 2018.

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