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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: HON’BLE SHRI SANDEEP GOSAINvk;dj vihy la-@ITA No. 317/JP/2022
per this return, there is long term capital loss of Rs. 3,37,497/- which is carried forward. Therefore, AO is directed to allow set off of carried forward long term capital loss of Rs. 3,37,497/- of AY 2015-16 against the long term capital gain of Rs. 3,38,161/- after verification. The balance gain would be set off against a long term capital loss on sale of plot as discussed in ground no. 2 hereinafter. Thus, this ground of the assessee is restored to the AO for allowing set off after verification.
Ground No. 2 relates to upholding the action of AO in computing the short term capital gain from sale of Vatika plot.
The brief facts of the case are that during the year under consideration the assessee sold a plot situated in Vatika Infotech City, Jaipur for Rs.36,00,000/- to Vikesh Kumar vide sale agreement dt. 30.01.2016 (PB 15-18). The assessee has purchased this plot during the year 2006-07 for Rs.21,22,200/- (PB 34) and further incurred expenditure of Rs.2,28,071/- during the year under consideration. Thus total cost of acquisition of this property works out at Rs.23,50,271/- (2,28,071+21,22,000). On sale of the plot, there is long term capital loss of Rs.10,48,298/- computed as under:-
Particulars Amount(Rs.) Sales Proceeds 36,00,000/- Less: Indexed Cost of Acquisition 2006-07 21,22,200* 1081/519 44,20,227/- 2016-17 2,28,071 2,28,071/- Long Term Capital Loss 10,48,298/- The assessee in the return has not declared long term capital loss incurred on sale of the said plot by oversight but in course of assessment proceeding complete details were filed vide letter dated 08.12.2018 (PB 19-23)& 11.12.2018(PB 24-28) along with supporting evidences. The AO, however, observed that assessee has provided list of investment as on 31.03.2016 (PB 11) containing opening balance of each investment but the value of impugned plot is shown as Nil in the said list. The investment of Rs.7,24,31,417/- is also part of ITR (PB 9). He therefore did not allow the deduction for cost of Rs.21,22,000/- incurred in FY 2006-07 and computed the STCG on sale of land at Rs.33,71,929/- (36,00,000-2,28,071) and made addition for the same. Aggrieved by the order of AO, the assessee preferred appeal before the ld. CIT (A). The Ld. CIT (A) upheld the action of AO by holding that though the appellant claimed an investment of Rs.21,22,200/- made in this plot in the year 2006-07 but there is no opening balance shown. The appellant claimed that this happened ‘Inadvertently’. It is clear from this that this asset was acquired by the assessee outside the books of accounts and consequently this transaction was not shown in the return of income filed. It is only when the appellant’s case was selected for scrutiny and the AO raised a query in this regard and perhaps the information regarding sale of this plot was in the possession of department, the appellant declared this transaction and further tried to take the benefit of such loss by setting it off against the LTCG earned on sale of securities. Clearly this cannot be allowed.
The appellant has not claimed this loss in the return of income filed or even in the revised return. He, therefore, sustained the addition made by the AO.
Now the assessee is in appeal before the Tribunal.
Before me, the ld. A/R of the assessee submitted that in the return filed for the year under consideration the assessee in part A-BS has shown the value of investment at Rs.7,24,31,417/- (PB 9-11). The details of these investment was provided vide letter dated 28.11.2018 (PB 35-36). In this list the opening balance, amount debited, amount credited and the closing balance with respect to each of the investment is mentioned. Against the Plot at Vatika Infotech, no amount is mentioned in the opening balance, Rs.2,28,071/- is debited, Rs.31,54,553/- is credited and the closing credit balance is shown at Rs.29,26,482/- and after considering the same the closing balance of investment is worked out at Rs.7,24,31,417/-. Since the plot at Vatika Infotech was purchased long back, the initial investment made in purchase of this plot was left to be incorporated in the details of investment by oversight but since the sale of this plot is shown in this list it shows that assessee has no intention to not disclose this investment. In fact in the Balance Sheet for AY 2015-16 the value of investment was declared at Rs.7,21,55,198/- (PB 12-13) but in the list of investment (PB 14) since this plot was not appearing, in the list of investment prepared for the subsequent year no opening balance was shown against this plot. However, the fact remains that this plot was purchased by the assessee in FY 2006-07 for a consideration of Rs.21,22,200/- which is evidenced by the bank statement of assessee (PB 29-33) and receipt of Vatika Ltd. (PB 34). Thus, when the year of acquisition of plot and evidence of payment is available on record, the short term capital gain calculated by the AO and confirmed by the Ld. CIT(A) is factually incorrect.
7.1. It may be noted that the said plot was purchased in FY 2006-07 for Rs.21,22,200/- and further payment of Rs.2,28,071/- was made during the year under consideration. The cost incurred by the assessee is duly verifiable from the receipt issued by Vatika Ltd. (PB 34) as well as bank statement (PB 29-33) filed before the AO. The details of payment made are as under:-
S. No. Cheque No. Date Amount (in Rs.) 1 19344 21.04.2006 1,17,900/- 2 19343 21.04.2006 1,17,900/- 3 295755 12.07.2006 4,71,600/- 4 295756 12.07.2006 4,71,600/- 5 16931 02.11.2006 4,71,600/- 6 399423 01.02.2007 4,71,600/- Total 21,22,200/-
The ld. A/R submitted that the lower authorities have not found any discrepancy in the evidences furnished. Hence, only because in the list of investment the opening balance of this land is not reflected, it cannot be inferred that assessee has not incurred any cost on purchase of land.
7.2. In view of above facts narrated, the ld. A/R submitted that the A.O be directed to allow the deduction for cost of acquisition of the said plot and after indexation compute the long term capital loss as against short term capital gain computed by him.
On the other hand, the ld. D/R supported the orders of the lower authorities.
I have heard the rival submissions and perused the material available on record and also gone through the orders of the lower authorities. We find that assessee sold the plot at Vatika Infotech City for Rs. 36,00,000/- vide sale agreement dated 30.01.2016. The AO computed short term capital gain on sale of this plot at Rs. 33,71,929/- for the reason that cost of acquisition on this plot is not reflected in the list of investment as on 31.03.2016. The Ld. CIT (A) has also not accepted the contention of the assessee that cost of acquisition of this plot in FY 2006-07 was Rs. 21,22,200/- and after indexation there would be long term capital loss instead of short term capital gain assessed by the AO solely for the reason that assessee has not claimed this loss in the return of income filed or even in the revised return. I find that assessee has placed on record the evidence of cost of acquisition of this land in FY 2006-07 for Rs. 21,22,200/- by submitting the bank statement showing the details of payment and also the letter from Vatika Infotech City acknowledging the receipt of such amount. This fact is not disputed by the lower authorities. Therefore, only because the assessee has not claimed the loss in the return filed by him, the same cannot be denied in computing the long term capital loss of Rs. 10,48,298/- as claimed in course of assessment proceedings vide letter dated 08.12.2018. Therefore, the AO is directed to verify the computation of long term capital loss of Rs. 10,48,298/- as claimed by the assessee and if found correct accept the same as against short term capital gain of Rs. 33,71,929/- assessed by him. The loss would also be available for set off against the long term capital gain of Rs. 3,38,161/- on sale of ICICI Prudential Corporate Fund as discussed in ground no.
9 Smt. Vineeta Kumar, Jaipur. 1 above. Thus, this ground is restored to the AO as per the direction given here-in- above. 10. In the result, the appeal of the assessee is allowed for statistical purposes.