The computational calculations were carried out on 8-acetyl-7-hydroxy-4-methyl coumarin (AHM) and its water complex AHM+(H2O)4- [AHMH] at ground and excited states by employing density functional theory (DFT)/specific state time-dependent density functional theory (SS-TDDFT). In AHM and AHMH molecules, there is an intramolecular hydrogen bond between hydroxyl group and acetyl group along with inter-molecular hydrogen bonds in the hydrated molecule. The computational studies of molecular structural parameters, molecular electrostatic potential, natural bond orbital (NBO) analysis, the molecular orbital’s and UV-Vis spectra of both the molecules under polar solvents were explored by B3LYP/cc-pVDZ/PCM/EFP1 method. The intramolecular hydrogen atom transpired between hydroxyl to acetyl group in AHM/AHMH molecules from S0→S1 state but not in S0→S3/S0→S2 states even though the S3/S2 states have significant oscillation strengths. This indicates that intramolecular chage transfer (ICT) occurs within the molecules and it confirmed using potential energy surface (PES) scan studies.