Tribunal Decision: Partial win for Revenue on capital gain appeal, setback on loss set off.

The Tribunal partly allowed the Revenue's appeal. It upheld the acceptance of long-term capital gain and deletion of addition under Section 68. However, it ruled against the set off of long-term capital loss against long-term capital gain, citing Section 70(3) requirements.

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Issues Involved:
1. Acceptance of long-term capital gain shown by the assessee.
2. Deletion of addition under section 68 of the Income Tax Act, 1961, as unexplained cash credit.
3. Set off of long-term capital loss against long-term capital gain.

Issue-wise
Detailed Analysis:

1. Acceptance of Long-term Capital Gain:
The Revenue challenged the CIT(A)'s direction to accept the long-term capital gain shown by the assessee. The AO contended that the assessee failed to furnish concrete evidence of payment towards acquiring the flat at Skylark Society in 1992. The CIT(A) observed that the assessee's name was included as a joint owner in the shares issued by the Skylark Co-operative Housing Society and that the assessee sold the flat via a registered sale deed, which would not have been possible without rightful ownership. The CIT(A) noted that the assessee paid Rs. 4.25 lakhs as part of the purchase consideration in 1992 and enjoyed ownership until the sale in 2014. Thus, the long-term capital gains shown by the assessee were accepted.

The Tribunal upheld the CIT(A)'s decision, noting that the AO did not produce any evidence to dispute the joint ownership of the flat. The assessee furnished a bank statement substantiating the payment of Rs. 4.25 lakhs in 1992. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's grounds on this issue.

2. Deletion of Addition under Section 68:
The AO added Rs. 7,62,50,000 as unexplained credit, arguing that the assessee received this amount without ownership of any asset. The CIT(A) deleted this addition, stating that Section 68 could not be invoked as the amount was received as 50% sale consideration from a registered sale deed, which the AO did not dispute. The Tribunal agreed with the CIT(A), noting that the registered deed of transfer was available on record and the sale consideration received by the assessee could not be held as unexplained credit. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's grounds on this issue.

3. Set off of Long-term Capital Loss:
The AO denied the set off of long-term capital loss arising from STT paid transactions against long-term capital gain from the sale of the flat. The CIT(A) allowed the set off, following the decision of the coordinate bench of the Tribunal in M/s Raptakos Breet & Co. Ltd. The Revenue appealed, citing divergent views and a decision by the Hon'ble Kerala High Court in Appolo Tyres Ltd vs DCIT, which held that long-term capital loss from STT paid transactions could not be set off against long-term capital gain from the sale of land.

The Tribunal noted that the long-term capital loss arose from the sale of units of mutual funds on which STT was paid and sought to be set off against long-term capital gain from the sale of the flat. The Tribunal referred to the Kerala High Court's decision, which stated that Section 70(3) requires both the loss and the income to be computed under Sections 48 to 55 of the Act. The Tribunal found that the set off claimed by the assessee was not permissible under Section 70(3) and allowed the Revenue's ground on this issue.

Conclusion:
The appeal by the Revenue was partly allowed. The Tribunal dismissed the Revenue's grounds regarding the acceptance of long-term capital gain and the deletion of addition under Section 68. However, it allowed the Revenue's ground regarding the set off of long-term capital loss against long-term capital gain.

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