VISHNUKUMAR COKALCHAND GUPTA ,MUMBAI vs. ACIT CIRCLE 19(3), MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI NARENDRA KUMAR BILLAIYAVishnukumar Gokalchand Gupta 14, Duplex, 14th & 15th Floor, Ashinana CHSL, Laxmibaid Jagmohan Marg, Nepean Sea Road, Mumbai-400 006 Vs. ACIT, Circle-19(3) Matru Mandir, Tardeo Road, Mumbai-400 007
Per Saktijit Dey, Vice President:
This is an appeal by the assessee against order dated 29.05.2025, passed by National
Faceless Appeal Centre (‘NFAC’ for short), Delhi pertaining to the assessment year (A.Y.)
2016-17. 2. The solitary dispute in the appeal relates to disallowance of indexed cost of improvement while computing income under the head long term capital gain (‘LTCG’ for short). Briefly the facts are, the assessee is a resident individual. For the assessment year under dispute, the assessee filed his return of income on 04.10.2016, declaring total income of Rs.5,93,20,140/-. The major part of the income was on account of LTCG, arising out of 2
Bungalow situated at Chembur through registered sale deed executed on 15.12.1988. While the assessee and his wife owned the first floor of the building, the second floor was owned by assessee’s brother and his wife. Subsequently, in the financial year (‘F.Y.’ for short)
1993-94, the assessee’s brother and his wife gifted their share in the property to the assessee. The said property was sold by the assessee in the financial year relevant to the assessment year under dispute for a consideration of Rs.7,93,55,000/-. While computing
LTCG, the assessee claimed deduction towards cost of acquisition and cost of improvement and offered net LTCG of Rs.5,77,55,811/-. Insofar as, cost of improvement is concerned, the assessee claimed an amount of Rs.36,52,783/- incurred by him for the first-floor construction and interior work. Whereas, for the second floor, he claimed that his brother has incurred expenditure of Rs.1,04,81,602/- for construction and interior work.
In course of assessment proceeding, the assessee furnished certain documentary evidences to justify the claim of cost of improvement. The Assessing Officer (‘A.O.’ for short), however, was not convinced with the claim made by the assessee. He was of the view that firstly, the said immovable property was a completed house when purchased by the assessee, hence, required no further improvement. He observed, any repair, renovation cannot be considered as ‘cost of improvement’. Secondly, he observed, the assessee did not produce any documentary evidences that the expenditure was actually incurred. Accordingly, he disallowed the claim of indexed cost of improvement of Rs.1,41,34,385/- .
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5. Before us, ld. Counsel appearing for the assessee referred to the registered sale deed dated 15.12.1988, to emphasize that what the assessee and his brother had purchased was a plot of land with an incomplete building. He submitted, after purchasing the property, both the assessee and his brother had subsequently invested in construction of the building and it was completed in the F.Y. 1993-94. He submitted, the investment made in construction of building was reflected in the balance sheet as well as Wealth Tax returns of both the assessee and his brother. He submitted, on completion of construction, the competent authority, i.e., Brihanmumbai Municipal Corporation (BMC) had issued a Completion Certificate on 08.04.1995. Thus, he submitted, there are enough documentary evidences produced before the Departmental Authorities to establish that after the purchase of the property was made in 1988, substantial investment was made towards cost of improvement. To further substantiate the claim of cost of improvement, ld. Counsel for the assessee furnished before us an application dated 10.10.2025, seeking admission of following additional evidences submitted in a separate paper book:
7. The ld. Departmental Representative (‘ld. DR’ for short) strongly objected against admission of additional evidences. She submitted, since the assessee had sufficient opportunity to furnish the evidences before the Departmental Authorities, they cannot be furnished at this stage. Without prejudice, ld. DR submitted, in case the additional evidences are admitted, since their authenticity needs to be factually verified, the matter may be restored back to the A.O.
We have considered rival submissions and perused the materials available on record. The assessment order itself reveals that in course of assessment proceedings, the assessee had furnished certain documentary evidences such as Completion Certificate issued by BMC on 08.04.1995, Wealth Tax Returns of the assessee and his brother, balance sheet etc. to establish that after purchase of the land and structure standing over it in the year 1988, both the assessee and his brother have made investments in construction of the 5 Vishnukumar Gokalchand Gupta vs. ACIT building. Further, the registered sale deed indicates that the assessee and his brother had purchased a property in the nature of ‘land’ on which an incomplete building was standing. The fact that the assessee owned the first floor of the building and the second floor was subsequently gifted by his brother to the assessee, has not been disputed by the Department. As per section 49(1) of the Act, the cost of acquisition of the asset shall be deemed to be the cost for which previous owner of the property acquired it, as increased by the cost of any improvement of the assets incurred or borne by the previous owner of the assessee, as the case may be.
It is the case of the assessee that an amount of Rs.1.41 crores was incurred by him and his brother for construction of the house. To further augment his claim, the assessee has furnished certain additional evidences before us, as noted above. On perusal of these documentary evidences furnished as additional evidence, prima facie, we find some force in the claim of the assessee that after purchasing an incomplete building in the year 1988, both, the assessee and his brother have made investments in further construction. Even, in the submissions before the Departmental Authorities, the assessee has consistently taken this stand. Since the additional evidences furnished by the assessee will have crucial bearing in determining the issue in dispute, we are inclined to admit them. However, considering that the Department has raised concern about the authenticity of these documents and requirement of factual verification of their content, we are inclined to remit the issue back to the file of the A.O. for fresh adjudication, after carefully verifying all the documentary evidences including the additional evidences furnished before us by the assessee in support of its claim of incurring expenditure towards cost of construction. In this context, we may further observe that to verify assessee’s claim of cost of improvement,
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Mumbai; Dated : 23.10.2025
Roshani, Sr. PS
Copy of the Order forwarded to :
The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,
(Dy./Asstt.