Cost of acquisition: allow claimed cost and remit to AO to recompute long-term capital gains under statutory scheme.

Where summary assessment treated entire sale proceeds of equity-oriented mutual funds as capital gain without allowing the assessee's claimed cost of acquisition, and no valid notice or substantive adverse finding on cost was recorded, the appropriate remedy is remand: the Assessing Officer must consider the broker-stated cost of acquisition and recompute long-term capital gains in accordance with the statutory computation scheme. Rectification and remand proceedings that did not establish an adverse difference do not justify denying the claimed cost; outcome: matter remitted to AO and decision favours the assessee.

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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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