Assessee wins appeal on long term capital gain computation with Rs. 45 lakh acquisition cost and indexation benefit allowed

ITAT Delhi allowed the assessee's appeal regarding long term capital gain computation. The tribunal held that cost of acquisition should be Rs. 45 lakhs based on evidence of payment through cheques, directing AO to delete addition of Rs. 33,73,120 and grant indexation benefit. Additionally, ITAT ruled that assessee is entitled to carry forward of long term capital loss after set-off, directing AO to verify and allow the claim factually.

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Issues:
1. Challenge to addition of long term capital gain
2. Denial of benefit of carry forward of capital loss

Analysis:

Issue 1: Challenge to addition of long term capital gain

The appeal was against the final assessment order for the assessment year 2020-21, where the assessee challenged the addition of long term capital gain of Rs. 33,73,120. The assessee, a non-resident individual, had sold two properties - a residential property and a commercial property. The Assessing Officer rejected the indexed cost of acquisition claimed by the assessee for the commercial property and re-computed the capital gain, resulting in a net long term capital gain of Rs. 33,73,120. The assessee contended that the cost of acquisition should be considered as Rs. 45 lakhs, the amount paid to the original owner, rather than the lower amount considered by the Assessing Officer. The tribunal, after considering the submissions and evidence, directed the Assessing Officer to delete the addition of long term capital gain and accept the computation of income by considering the cost of acquisition at Rs. 45 lakhs.

Issue 2: Denial of benefit of carry forward of capital loss

The second ground of appeal was the denial of the benefit of carry forward of capital loss. The assessee had claimed long term capital loss on the sale of both properties but the Assessing Officer did not allow set off and carry forward of the long term capital loss in the final assessment order. The tribunal noted that the assessee was entitled to avail the benefit of carry forward of long term capital loss and directed the Assessing Officer to verify the issue factually and allow the carry forward of the claimed capital loss. Consequently, this ground of appeal was allowed, and the overall appeal was allowed by the tribunal.

In conclusion, the tribunal ruled in favor of the assessee, directing the Assessing Officer to delete the addition of long term capital gain and allow the benefit of carry forward of capital loss. The detailed analysis of the facts and legal arguments presented by both parties led to a favorable outcome for the assessee in this case.

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