ALPA V SAVLA,MUMBAI vs. ITO 22(1)(1), MUMBAI

The assessee is aggrieved by the decision of learned CIT(A) in confirming the order of the Assessing Officer in rejecting the claim of cost of improvement of ` 7,50,000/- while computing short term capital gain and also in not allowing claim of set off of brought forward short term capital loss of ` 4,37,551/- relating to A.Y. 2008-09.

Learned counsel appearing for the assessee submitted that the assessment of the year under consideration was completed originally u/s. 143(3) of the Act accepting the return of income filed by the assessee. In the return of income the assessee had inadvertently omitted to disclose short term capital gain earned by her. However, during the course of assessment

On the contrary, learned Departmental Representative submitted that the assessee has purchased the property on 7.2.2012 and claimed to have incurred entire expenditure towards improvement on 8.2.2007 itself. Hence learned CIT(A) has expressed doubts about the claim made by the assessee, since improvement to immovable property cannot be carried out in one day that too, to the extent of ` 7,50,000/-.

With regard to the claim of set off of brought forward losses, learned Departmental Representative submitted that the assessee has not shown relevant details in the return of income and hence said claim was rejected.

I have heard the rival contentions and perused the record. I noticed from the letter filed with the Assessing Officer on 11.11.2011 which is placed on record at page No. 38 of the paper book, that the assessee has furnished details relating to losses incurred in earlier year and also furnished details of computation of capital gain. Before learned CIT(A) the assessee has furnished details of payment of ` 7,50,000/- towards cost of improvement. I noticed that the above said amount of ` 7,50,000/- has been paid by way of cheques on 8.2.2007 i.e. on the next date of purchase of the property. Accordingly, learned CIT(A) has inferred that the assessee could not have paid the entire amount of cost of improvement on the very next date. However, I noticed that learned CIT(A) has not called for any explanation with regard to the payment so made and has also not examined the details of cost of improvement claimed to have been carried out by the assessee. I have earlier noticed that the assessee has claimed to have furnished the relevant details before the AO, but the AO did not examine the same. Accordingly, I am of the view that this issue requires fresh examination at the end of the Assessing Officer. With regard to the claim of set off of brought forward losses also, I noticed that the assessee has furnished relevant details to the Assessing Officer and hence the same is required to be allowed in accordance with law after carrying out necessary examination, since there is no estoppel against law.

In view of the forgoing, I set aside the order passed by learned CIT(A) in respect of both the issues under consideration and restore them to the file of the Assessing Officer with the direction to examine the claims of the assessee and take appropriate decision in accordance with law, after affording necessary opportunity of being heard to the assessee.

In the result, appeal filed by the assessee is treated as allowed for statistical purposes.