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<h1>Cost of acquisition: allow claimed cost and remit to AO to recompute long-term capital gains under statutory scheme.</h1> Where summary assessment treated entire sale proceeds of equity-oriented mutual funds as capital gain without allowing the assessee's claimed cost of ... Treatment of cost of acquisition in computation of long-term capital gains - computation of LTCG u/s 112A by taxing the entire sale proceeds without allowing cost of acquisition. HELD THAT:- Tribunal found that the CPC, while processing the return u/s 143(1), ignored the cost of acquisition and treated the entire sale consideration as capital gain. Noting that the AO in remand proceedings had not made any adverse comment on the cost of acquisition and that the claimed cost was supported by the broker statement, Tribunal concluded that the matter required fresh consideration. Tribunal therefore directed the jurisdictional AO to consider the cost of acquisition as claimed by the assessee and to recompute the long-term capital gain in accordance with the provisions of the Income Tax Act. [Paras 4] Final Conclusion: The appeal is allowed for statistical purposes and the matter is remitted to the AO for recomputation of long-term capital gains after considering the cost of acquisition claimed by the assessee. Issues: Whether the processing under summary assessment ignored the cost of acquisition leading to incorrect computation of long term capital gains and whether the matter should be remitted to the Assessing Officer to consider the cost of acquisition and recompute LTCG.Analysis: The return declared long term capital gains on sale of equity oriented mutual funds adopting cost of acquisition as per broker statement; in processing the return the entire sale proceeds were treated as capital gain without allowing cost of acquisition. The proposed adjustment notice was limited to deductions under Chapter VI-A and did not relate to capital gains, rectification under the rectification provision was rejected, and remand proceedings recorded no adverse difference with the broker statement. Having regard to the statutory scheme for computation of long term capital gains and the absence of a valid opportunity or substantive adverse finding on cost of acquisition, the appropriate course is to direct the Assessing Officer to consider the cost of acquisition claimed by the assessee and to recompute the long term capital gain in accordance with law.Conclusion: The cost of acquisition claimed by the assessee is to be considered and the long term capital gain is to be recomputed by the Assessing Officer; decision is in favour of the assessee.Ratio Decidendi: Where summary processing treats gross sale proceeds as capital gain without allowing claimed cost of acquisition and no valid notice or adverse finding on cost exists, the matter should be remitted to the Assessing Officer to consider and allow cost of acquisition and recompute long term capital gains in accordance with the Income-tax Act.
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