The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the Income Tax Department cannot adopt contradictory positions in respect of the same property transaction involving co-owners.
The bench of Raj Kumar Chauhan (Judicial Member) and Renu Jauhri (Accountant Member) has allowed an assessee’s claim of Long-Term Capital Loss (LTCL) of ₹2.94 crore, observing that the Revenue had already accepted an identical computation in the scrutiny assessment of the assessee’s husband for the very same property transaction.
The appeal arose from the assessment for Assessment Year (AY) 2022-23, where the assessee had declared total income of ₹5.60 lakh while claiming a Long-Term Capital Loss of ₹2.94 crore arising from the sale of a jointly owned residential property in DLF Phase-V, Gurugram.
The property had been purchased jointly by the assessee and her husband for approximately ₹3.82 crore, with payments made in installments during financial years 2010-11 to 2012-13. The property was subsequently sold on June 28, 2021, for ₹4.80 crore, with the assessee accounting for her 50% share of the sale consideration amounting to ₹2.40 crore while computing capital gains.
Buy Now: Income Tax (Direct Tax) Judgments Monthly E-Magazine – May 2026
During scrutiny proceedings, the Assessing Officer questioned the computation of capital gains and disallowed the assessee’s claim relating to indexed cost of acquisition and other components of cost. The assessment ultimately converted the declared long-term capital loss into a Long-Term Capital Gain (LTCG) of ₹92.71 lakh by disallowing substantial portions of the claimed cost. The National Faceless Appeal Centre (NFAC), acting as the first appellate authority, affirmed the assessment order.
Before the ITAT, the assessee contended that the indexed cost of acquisition was fully supported by documentary evidence, including the conveyance deed, payment schedules, ledger accounts and interest certificates. The purchase consideration had been paid over multiple financial years, entitling the assessee to indexation from the respective years of payment. Interest paid on loans used for acquiring the property formed part of the cost of acquisition under Section 48 for AY 2022-23 since the statutory amendment restricting such benefit is prospective.
Most importantly, the assessee highlighted that her husband, who was a co-owner in the same property and party to the identical transaction, had been allowed the very same computation during scrutiny assessment by the Department.
After examining the record, the ITAT found considerable merit in the assessee’s submissions.
The Tribunal noted that the Department had already accepted the computation of long-term capital loss in the case of the assessee’s husband under identical facts, involving the same property, same purchase transaction and same sale transaction. Once such computation had been accepted after scrutiny, the Revenue could not adopt an inconsistent stand in the case of the other co-owner.
The Bench observed that tax authorities are expected to maintain consistency where facts are identical and cannot selectively accept one co-owner’s computation while rejecting the other’s without any distinguishing feature.
Apart from the principle of consistency, the Tribunal also found that the assessee’s computation of long-term capital loss was backed by adequate documentary evidence.
The Bench recorded that the indexed cost claimed by the assessee was duly supported through conveyance deeds, payment records, ledger accounts, interest certificates and other supporting documents placed before the authorities. Consequently, the addition made by the Assessing Officer was held to be unsustainable.
Allowing the appeal, the Tribunal deleted the addition made by the Assessing Officer and directed the Department to allow the assessee’s claim of Long-Term Capital Loss of ₹2,94,41,694. The appeal was accordingly allowed in favour of the taxpayer.
Membership Required to Access Case Details & Order Copy
To view the complete Case Details and Download Order Copy, you must have an active membership. Please subscribe to continue.
