Ketan Pravinchandra Kamdar Vs DCIT (ITAT Mumbai)
Capital Loss Claim Allowed as Flat Allotment Right Held Capital Asset: ITAT Mumbai
The appeal before the ITAT Mumbai arose from the order dated 26.11.2025 passed by the CIT(A)/NFAC for AY 2020-21. The assessee challenged the treatment of ₹26,93,950 received on surrender of rights in an immovable property as “Income from Other Sources” instead of considering it under the head “Capital Gains,” and also challenged the consequential disallowance of a long-term capital loss of ₹5,67,922.
The assessee, an individual, filed his return of income on 14.12.2020 declaring income of ₹11,00,090. During scrutiny assessment, the Assessing Officer noted that the assessee had received ₹26,93,950 from Proviso Builders and Developers, on which tax had been deducted at source under Section 194A. In response to the show cause notice, the assessee explained that he had been issued an allotment letter for Flat No. A-1402 in Sai Proviso Aashlesha Building on 11.06.2012. The flat was surrendered on 03.07.2019, and the compensation received on surrender represented consideration for transfer of a capital asset, resulting in a long-term capital loss. The Assessing Officer rejected the explanation, treated the compensation as income from other sources, and disallowed the long-term capital loss.
