Mumbai tribunal reiterates that capital gains require actual profit, not notional income.

No Capital Gains Tax When Sale Price Equals Purchase Cost: ITAT.

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has ruled that no capital gains tax can be levied when the sale consideration of a property is equal to its purchase cost. The tribunal allowed the appeal of taxpayer Kamini V, deleting a ₹42.5 lakh addition made by the tax department for the assessment year 2015–16. The case involved a jointly owned residential flat purchased for ₹85 lakh and sold two years later for the same amount. The Income Tax Officer had treated the taxpayer’s 50% share as short-term capital gains due to a lack of documentation during reassessment. However, the taxpayer argued that once the cost of acquisition and stamp duty were deducted, no gain arose. The tribunal noted that documents later proved identical purchase and sale values and also relied on a similar ruling in the co-owner’s case. The ITAT held that capital gains tax applies only where there is a real profit, reinforcing a key principle of taxation.