INCOME TAX OFFICER, CUMBALLA HILL vs. SETH DAMJI LAXMICHAND JAIN DHARMA STHANAK, CHINCHPOKALI

ITA 4824/MUM/2025Status: DisposedITAT Mumbai03 February 2026AY 2012-13Bench: SHRI SAKTIJIT DEY (Vice President), SHRI JAGADISH (Accountant Member)9 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the indexed cost of acquisition benefit is allowable for computing capital gains under Section 11, as statutory provisions permit such deductions. The AO's disallowance was not in line with statutory provisions and judicial precedents. The Tribunal also found that the claim for deduction under Section 11(1A) and the indexed cost of acquisition are mutually exclusive and there is no bar to claiming both. Regarding the donation, the first appellate authority rightly remanded the issue to the AO for verification.

What were the facts?

The assessee, a charitable trust, filed a return declaring Nil income after claiming exemption. During scrutiny, the AO noted the sale of a property and the assessee's claim for indexed cost of acquisition. The AO disallowed this claim based on a CBDT circular and judicial precedents. The assessee also claimed deduction for an amount accumulated/set apart for future application and a donation to another trust.

What were the issues?

Whether the assessee is eligible for the benefit of indexed cost of acquisition on capital gains and deduction for accumulated income under Section 11(1A), and whether a donation to another trust out of accumulated income is permissible.

Which sections of the Income-tax Act were involved?

Section 48,Section 11(1)(a),Section 11(1A),Section 11(2),Section 10(23C)(iv),Section 10(23C)(v),Section 10(23C)(vi),Section 10(23C)(vii),Section 12A,Section 12AA

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Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

For Appellant: Shri Hemant Jawahar Lal &, Shri Ravi Ganatra
For Respondent: Shri Arun Kanti Datta – CIT DR
Hearing: 14.01.2026Pronounced: 03.02.2026

Per Saktijit Dey, Vice President:

The present appeal by the department arises out of order dated 26.05.2025, passed by National Faceless Appeal Centre (‘NFAC’ for short), Delhi pertaining to the assessment year (A.Y. for short) 2012-13. 2. The effective grounds raised by the department are as under:

1.

"On the facts and circumstances in allowing of the case and in law, the Ld CIT(A) erred the benefit of indexed cost of acquisition trust registered u/s. 48 of the Act to a u/s. 12A, disregarding dated 19.06.1968. the CBDT Circular No 5-P(LXX-

2.

"On the facts and circumstances allowing accumulation of t

The order continues below.

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