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2019 (1) TMI 100 - AT - Income TaxRevision u/s 263 - computation of Long-Term Capital Loss shown by the assessee on the sale of flats is erroneous and prejudicial to the interest of revenue - Held that:- Here, it is not exchange of share with the flat rather the flats have been acquired for prefixed and agreed consideration between the transferor and the transferee and hence it is akin to sale under settlement with an agreed stipulation to withdrawal of suit and complaint. Thus purchase/acquisition mode and price cannot be disturbed and tinkered with some other value. Finding of the CIT to a logical conclusion that there are two transactions, that is, one of transfer of shares; and other of transfer of flat then consequentially there would be two computation of capital gains as on 01.11.2010; firstly, computation on sale of shares; and secondly, sale of flat. For the first transaction of transfer, the full market value of shares as determined by the Ld. CIT is ₹ 1,21,95,000/- and undisputedly the cost of acquisition would be ₹ 4,60,75,000/- which is the total amount of consideration agreed, then the resultant loss subject to indexation would be Rs.(-)3,38,80,000/-. For the second transfer (of flats), the computation of capital gain would be full value of consideration of the flat price in which it has been sold is ₹ 1,07,00,000/- and if the cost of acquisition as determined by the ld. CIT is ₹ 10,97,500/-, then the resultant capital gain would be ₹ 96,02,500/-. Thus, in this year there would be capital loss on sale of shares of ₹ 3,38,80,000/- and capital gain of ₹ 96,02,500/-, resultantly, there would be a Long- Term Capital Loss. Hence it cannot be held that it is prejudicial to the interest of revenue. Thus we hold that the order of the ld. CIT cannot be sustained, as the assessment order accepting the claim of Long-Term Capital Loss by the AO is not prejudicial to the interest of revenue as the assessee has rightly taken the cost of acquisition as per the actual consideration settled by the parties at the time of acquisition of flat. The reason being that it is not in dispute that the flat has not been acquired under the settlement but by some other means for which the cost of acquisition of the flat needs to be determined. The price of acquisition under the facts and circumstances cannot be changed at all and accordingly the resultant computation of capital gain would result in Long Term Capital Loss which has rightly been allowed by the AO. Disallowance u/s.14A, it has been admitted by both the parties that there was no dividend income earned by the assessee which has been claimed as exempt, and therefore, there would be no triggering factor of disallowance under section 14A in view of the judgment of Hon'ble Delhi High Court in the case of Cheminvest Ltd vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT]. Thus, on merits, we hold that assessment order may be termed as erroneous as he may not have conducted detailed inquiry on the points raised by him, but it cannot be held that such an assessment order is prejudicial to the interest of revenue and therefore in one of the condition is not satisfied, then the assessment order cannot be cancelled or set aside u/s.263 in view of the settled principle in the case of Malabar Industries Company Ltd. Vs. CIT [2000 (2) TMI 10 - SUPREME COURT]. - Decided in favour of assessee.
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