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2017 (3) TMI 1170 - AT - Income TaxLong term capital loss u/s 45(1A) - compensation received from the insurance company by adopting indexation cost of acquisition on account of assets destroyed in a fire accident in January, 2001 - Held that:- We have carefully considered the order passed by the Assessing Officer and find that the Assessing Officer has not discussed anything about the provisions of section 45(1A) of the Act or section 50 of the Act. The Assessing Officer simply accepted the return filed by the assessee, allowed capital loss claimed by the assessee. The Assessing Officer not asked any query in respect of capital loss claimed by the assessee. Insofar as the submissions of the learned counsel for the assessee that in paper book at page No. 21 letter submitted to the Assessing Officer which is undated, it cannot be given much weight for the simple reason that when it is filed before the Assessing Officer is not clear. Therefore, under these facts and circumstances of the case, we are of the view that the order passed by the Assessing Officer is without application of mind and also not considering the facts of the case. It is clearly erroneous order, therefore, deserves to be quashed. When the assessee has made a claim under section 45(1A), the Commissioner of Income Tax without considering the provisions, simply observed that once the asset is put to use, it means, it amounts to a depreciable asset and it attains the character of a short term capital asset, which is not entitled for indexation of its cost and also it cannot be claimed as a long term capital asset. Insofar as the above observation is concerned, we find that the Commissioner of Income Tax has not given any basis not only that, he simply directed the Assessing Officer to follow his observations. We find that the findings given by the Commissioner of Income Tax is baseless and therefore, it deserves to be set aside. In view of the above, we find that the order of the Commissioner of Income Tax has to be modified. Accordingly we set aside the order passed by the Commissioner of Income Tax and direct the Assessing Officer to re-do the assessment in accordance with law without influencing the observations of the Commissioner of Income Tax after being given reasonable opportunity of hearing to the assessee.
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