ITAT Directed AO to Allow Indexed Cost of Acquisition Even Though the Assessee Forgot to Claim it in Return

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  • By Taxmann
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  • Last Updated on 24 November, 2023

deduction under section 54

Case Details: Alok Ghosh vs. Income Tax Officer - [2023] 156 549 (Kolkata-Trib.)

Judiciary and Counsel Details

    • Sanjay Garg, Judicial Member & Girish Agrawal, Accountant Member
    • Rip Das for the Appellant.
    • Ms Monalisha Pal Mukherjee for the Respondent.

Facts of the Case

During the year under consideration, the assessee sold 2 house properties and furnished its return of income by claiming a deduction under section 54 of the Act under the head of “Long Term Capital Gain”. However, the Assessing Officer (AO) passed an assessment order under section 143(3) by disallowing the entire claim of deduction preferred under section 54 of the Act.

The AO contended that the assessee suo moto computed long-term capital gain arising from the sale of two properties without claiming any deduction under section 48 of the Act towards the cost of acquisition with indexation.

On appeal, CIT(A) upheld the additions made by AO. The CIT(A) held that the assessee is not entitled to claim deduction u/s. 48 for the first time during the course of assessment proceedings unless made by way of filing a revised return under section 139(5) of the Act. He, thus, held that since the assessee has not filed any revised return for the purpose of claiming a deduction of the cost of acquisition with indexation under Section 48 of the Act, the claim of the assessee is not admitted.

Aggrieved by the order of CIT(A), assessee filed an appeal before the Tribunal.


The Tribunal held that the assessee admitted that there was a mistake in claiming the correct deduction towards the cost of acquisition with indexation from the full value of sale consideration of the two house properties and requested that the matter be remitted back to the AO.

Therefore, considering all the facts, the Tribunal remitted the matter back to the AO for verification and examination of the material available on record and allowed the claim of the assessee in accordance with the provisions of law and directed that the assessee be given reasonable opportunity of being heard to make any further submission to substantiate his claim.

Accordingly, the assessee’s appeal was allowed.

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