LAKSHMINARAYAN REALFINVEST ,MUMBAI vs. DY, COMMISSIONER OF INCOME TAX , CIRCLE -10(2)(1), MUMBAI

Per: Smt. Beena Pillai, J.M.:
The present appeal filed by the assessee arises out of order dated 05/06/2024 passed by NFAC Delhi, for assessment year
2015-16 on following grounds of appeal:
“Ground no.1
The Ld. CIT(A) erred in confirming the disallowance of appellant's claim of brought forward long-term capital loss without appreciating

ITA No. 3832/Mum/2024;A.Y.2015-16

Lakshminarayan Realfinvest Ltd.

the fact that the appellant had not sold listed shares through any stock exchange and no STT was paid, hence appellant's claim of set- off of brought forward long-term capital loss was allowable The appellant prays that the said disallowance may kindly be deleted.
Ground no.2
The Ld. CIT(A) erred in confirming the disallowance of indexation of cost from the date of purchase of the property without appreciating the fact that the appellant had acquired ownership rights on the property on 03.12.2010 and hence indexed cost should have been allowed from that date. The appellant prays that the said action may kindly be deleted.
Ground no.3
The Ld. CIT(A) erred in confirming the disallowance of interest expenses of Rs1,12,944 paid for acquiring the property sold without appreciating the fact that the said interest amount was not debited to Profit and Loss Account but added to the cost of the property. The appellant prays that the said disallowance may kindly be deleted.
The Appellant craves leave to amend, alter or delete any of the grounds of appeal at or before the time of hearing.”

Brief facts of the case are as under:
2. The assessee is a company involved in the business of financial and investment activities. The total receipts credited to profit and loss account, includes revenue from operations amounting to Rs.41,51,523/- and other income of Rs.2,97,53,004/.
The Ld.AO noted that, after debiting expenses under various heads such as finance cost and other expenses etc., the assessee declared total income at Rs.3,64,950/-. The case was selected for scrutiny and notice under section 143(2) of the act, was issued along with notice under section 142(1). In response to the statutory notices, representative of assessee appeared before the Ld.AO and filed requisite details is called for.

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Lakshminarayan Realfinvest Ltd.

Lakshminarayan Realfinvest Ltd.

interest paid on borrowed funds for purchase of the property while computing LTCG.
2.5 The Long term capital loss claimed by the assessee was also disallowed by the Ld.AO as he was of the opinion that the LTCL was covered under section 10(38).
Aggrieved by the order of the Ld.AO, the assessee preferred appeal before the Ld.CIT(A).
3. The Ld.CIT(A), upheld the addition made by the Ld.AO.
Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal.
4. At the outset the Ld.AR submitted that the assessee do not wish to argue on Ground no.3. Accordingly Ground no.3 raised by the assessee stands dismissed as not pressed.
5. The Ld.AR first argued Ground no.2 wherein the assessee has challenged the denial of indexation from the year 2010. 5.1 Ld.AR submitted that, the assessee became owner of the property on 03/12/2010 when the 1st instalment was paid amounting to Rs.21,00,000/-. He submitted that, on that day itself the developer issued allotment letter, annexed to the paper book page 81 to 83 of the paper book. He submitted that, the since asset was held for the first time since 2010, cost inflation index of that year was to be applied on the total purchase consideration payable by the assessee as per agreement.

ITA No. 3832/Mum/2024;A.Y.2015-16

Lakshminarayan Realfinvest Ltd.

ITA No. 3832/Mum/2024;A.Y.2015-16

Lakshminarayan Realfinvest Ltd.

"indexed cost of acquisition" means an amount which bears to the cost of acquisition the same proportion as Cost Inflation
Index for the year in which the asset is transferred bears to the Cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April, [2001], whichever is later.
6.2 The above definition does not refer to any payment made or the date of payment. It is also noted that, there are various decisions of this Tribunal that took view that, the benefit of indexation is to be allowed from the date of allotment and on the basis of payment made to builders/ societies/ other institutions during the different financial years towards cost of acquisition of asset.
6.3 In the present facts of the case, the assessee was issued allotment letter on 3/12/2010 relevant to financial year 2010-11. It is noted that the assessee made full payment during the assessment year 2014-15, and the document was registered in favor of the assessee. Subsequently, the said property was sold during the assessment year 2015-16. Since the date of acquisition of the property is to be reckoned from date of allotment letter, benefit of indexed cost of acquisition should be available to assessee based on payments made beginning from financial year 2010-11. Accordingly Groungno.2 raised by the assessee stands allowed.

ITA No. 3832/Mum/2024;A.Y.2015-16

Lakshminarayan Realfinvest Ltd.

Asst. Yr.
LTCL
Mode of transfer of Shares
2009-10
12,90,718/-
Shares were transferred through stock exchange and STT was paid.
2010-11
3,96,16,965/-
Shares were sold off market and no STT was paid

The Ld.AR drew out attention to the return of Income for assessment year 2009-10 and 2010-11 placed at pages 5-11 and 12-20 respectively.
7.2 He submitted that, STT was paid on the shares purchased that were sold on stock Market as well as off market. He placed reliance on page 20 wherein, the details of long-term capital loss on sale of shares during assessment year 2011-12 is placed.
7.3 He submitted that the long-term capital loss was carry forwarded and the net amount was reflected at page 23 in the returns filed for assessment year 2011-12. The brought forward loss of AY 2011-12 was of Rs.3,92,21,548/-, after adjustment of Rs
2,10,056/- in AY 2012-13 further Rs.1,85,361/- was adjusted in AY

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Lakshminarayan Realfinvest Ltd.

2013-14. It is thus submitted that the same should have been allowed to be set-off during the year.
7.4 He submitted that, for assessment year 2011-12 the revenue did not disputed the carry forward of loss as is clear from page 18-
19 of paper book. The Ld.AR submitted that the assessee thus adjusted long term capital gain of Rs.3,96,16,965/- of the current year against brought forward capital loss of Rs.4,05,12,266/- from earlier years. He submitted that, assessee cannot be denied set off of the brought forward losses on sale of shares against the long-term capital gains earned by assessee against the sale of property during the year under consideration.
7.5 On the contrary, the Ld.DR relied on the orders passed by authorities below.
We have perused the submissions advanced by both sides in light of records placed before us.
8. The loss were not allowed to be set off merely because the Ld.AO was of the opinion that, STT was not paid on these shares and that, they were to be considered under section 10(38) of the Act. It is submitted by the assessee that, the assessee filed all relevant documents before the authorities below, however the same was not considered.
8.1 The Ld.AR also submitted that, application under section 154
on this issue is still pending against the assessment order. It is further noted that, in the past assessment years, the Ld.AO did not deny the benefit on the basis that the claim is incorrect.

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Lakshminarayan Realfinvest Ltd.

(Asstt.