RAJENDRA PRASAD MUNDRA,AJMER vs. INCOME TAX OFFICER, WD-2(1), AJMER, AJMER

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 1798/JPR/2025 (Assessment Year:2022-23)

Rajendra Prasad Mundra Vs. ITO 1232/28, Bihari Ganj, Ward 2(1) Nasirabad Road, Ajmer Ajmer �थायीलेखासं./जीआइआरसं./PAN/GIR No:ABRPM 5169 Q Appellant .. Respondent

Appellant by : Sh. Sunil Porwal, CA (thru. V.C) Respondent by : Mrs. Aarti Rawat, JCIT

Date of Hearing 15.07.2026 Date of Pronouncement 22.07.2026 O R D E R The present appeal has been filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi(hereinafter referred to as “Ld. CIT(A)”), dated 24.11.2025under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2. The assessee has raised the following grounds of appeal:- 1. That the appellant on 28/10/2012 booked Flat (Silver Crown, Jaipur 1/2 share) with bank loan. The final possession thereof was granted on a later date. Thus appellant has capitalised such interest on ICICI home loan of Rs. 4,19,720/- (Total interest debited by bank from 28/10/2012 to 17/05/2016 for EMI such finance) on such property and has

P a g e | 2 ITA No.1798/JPR/2025 Rajendra Prasad Mundra claimed "COST OF IMPROVEMENT" of this interest paid till date of possession and capitalized to cost. The AO has denied to consider the same for calculation of Long Term Capital Gain and Ld CIT(A) has denied the same with remark "Same claimed u/sec. 24(b) of Act under house property during the year" whereas same in amount of interest paid for the year 01/04/2021 to 31/03/2022. 2. That Ld CIT(A) has not granted COST OF IMPROVEMENT of Rs. 6,20,750/- (CII Value) to the extent of BOUNDRY WALL constructed on such land sold (Buda Pushkar Land) completed documents filed. 3. Any other matter with prior permission of the chair. 3. The solitary issue in the present appeal relates to the denial of benefit of cost of improvement claimed by the assessee while computing the Long Term Capital Gains earned on the sale of immovable property. 4. The order of Ld. CIT(A) reveals that, the assessee was denied the benefit of the cost of acquisition of the asset/improvement of the asset relatingto interest paid on housing loan taken for acquiring the said property. The assessee had capitalized interest of ICICI home loan taken of Rs.4,19,720/-, and claimed the same as cost of improvement ,capitalizing it to the cost of acquisition of the asset. 5. The order of Ld. CIT(A) reveals that he upheld the denial of cost of acquisition made by the AO finding the assessee to have taken deduction of the said interest u/s 24(b) of the Act, while computing his income under the head “Income from house property”. The Ld. CIT(A)s order reveals that he derived this fact from computation of income furnished by the assessee. The findings of Ld. CIT(A) are contained at para 5.1 of the order, which reads as under:- 5.1. Ground 1

P a g e | 3 ITA No.1798/JPR/2025 Rajendra Prasad Mundra Vide this ground, the Appellant has objected to the addition of Rs. 7,55,998/-under the head LTCG on account of sale of flat. This addition had two components. One,addition on account of lesser COA adopted by the AO. This has been rectified by the AO vide order passed u/s 154 of the Act, taking the value of COA as per Appellant's submission. The other component is addition by not allowing capitalisation of interest paid on the housing loan taken. In this regard, I find from statement of computation of income of the Appellant that he has claimed deduction u/s 24(b) of the Act. In view of this fact, further capitalisation of interest to the COA is not permissible. Hence, addition by the AO to this extent is confirmed. Ground is, thus, partly allowed. 6. Before me, ld. Counsel for the assessee contended that, the Ld. CIT(A) had noted incorrect facts, while denying the benefit of interest paid for acquisition of the asset. He drew my attention to the return of income filed by the assessee placed before me at paper book page No.1 and pointed out, that the Ld. CIT(A) had noted from the return of income, the assessee’s claim of deduction of interest u/s 24(b) , which had been claimed in respect to a property at Ajmer, income from which was returned under the head “Income Form House Property”. He pointed out, that the same computation of income revealed the assessee to have returned capital gain on the sale of a completely different property, which was a flat situated at Jaipur. That therefore the finding of Ld. CIT(A), that the assessee had claimed the benefit of deduction of interest paid on housing loan in his computation of income was totally incorrect. 7. Ld. DR was unable to controvert the contention of the ld. Counsel for the assessee, and I have noted from the computation of income filed before me, that the facts pointed out by the ld. Counsel for the assessee are correct. Even otherwise, the Ld. CIT(A) has recorded in his order that, he had noted the fact of the assessee having claimed

P a g e | 4 ITA No.1798/JPR/2025 Rajendra Prasad Mundra deduction of interest u/s 24(b) of Act from his statement of computation of income. However, as pointed out above by him, the Ld. CIT(A) has not appreciated the facts revealed in the computation of income correctly. The assessee had not claimed the deduction u/s 24(b) of the Act of interest paid on housing loan with respect to the loan taken on the property sold during the year. Therefore, the denial of benefit of the capitalization of interest, so paid for the aforestated reason, I hold is blatantly incorrect. Since this is the only reason for which, the Ld. CIT(A) has confirmed the order of the AO, I have no hesitation in holding that the order passed by the Ld. CIT(A) is not sustainable on facts. The denial of benefit of capitalization of interest paid on loan taken for acquisition of the asset sold during the year, I hold therefore, is not justified and direct deletion of the addition made to the income of the assessee on account of the same to the extent of Rs.4,19,720/-. 8. With respect to the denial of cost of improvement of Rs.6,20,720/-, while computing the capital gains earned by the assessee, the Ld. CIT(A), I have noted has dealt with the issue at para 5.2 of his order as under:- 5.2. Ground 2 Vide this ground, the Appellant has objected to the addition of Rs. 6,20,750/-under the head LTCG on account of sale of land. The Appellant has submitted that the AO has erred in not allowing indexed cost of improvement on account of boundary wall constructed on the land sold. The Appellant has submitted that the purchase deed of the land does not show existence of boundary wall on the land. However, the sale deed mentions about existence of boundary wall. This proves that the Appellant had constructed boundary wall on the land and hence, he is entitled for claim of indexation of cost of improvement.

P a g e | 5 ITA No.1798/JPR/2025 Rajendra Prasad Mundra I have considered the submission made by the Appellant. I have also perused the assessment order. The AO has not considered cost of improvement in respect of claim of construction of boundary wall, since, the Appellant has failed to furnish any supporting documents pertaining to construction of wall. In the present proceedings as well, the Appellant has not furnished any documents that he had constructed boundary wall on the land. In absence of any supporting documents, the AO has rightly not given the benefit on account of cost of improvement. Ground is, thus, dismissed. 9. As is revealed from the above, this claim of cost of improvement pertained to a land sold by the assessee. The assessee had claimed to have purchase land and after purchase of land, he had claimed to have constructed a boundary wall against the same. The assessee had contended to have invested approximately 1 lakhs for the construction of the boundary wall, while computing his capital gain earned on the sale of the said land and had claimed to have incurred the cost of improvement for construction of boundary wall in the year in which land was acquired and after taking the benefit of indexation of the same, had computed the cost of improvement of Rs.6,20,750/- which was set off against the sale consideration of the impugned land for computing capital gain earned on the same. 10. The Authorities below have concurrently denied the assessee the benefit of cost of improvement for want of evidence of having constructed any boundary wall. 11. The solitary plea of the ld. Counsel for the assessee before me, was that the construction of the wall was duly evidenced by the fact that the sale deed evidencing the purchase of land mentioned no boundary wall, but only vacant land purchased by the assessee, while the sale deed evidencing the sale of land mentioned the fact of

P a g e | 6 ITA No.1798/JPR/2025 Rajendra Prasad Mundra boundary wall constructed therein. This was the only plea raised by the ld. Counsel for the assessee before me. 12. However, during the course of hearing, ld. Counsel for the assessee was asked at bar to explain that how, the above fact demonstrates that the wall was constructed in the year in which the land was purchased by the assessee, so as to grant it the benefit of indexation from the year of purchase of the land, which the assessee had claimed. Ld. Counsel for the assessee, had nothing to submit in defence. 13. Considering the above, I find force in the contention of the ld. Counsel for the assessee, that the assessee had sufficiently demonstrated the expense of construction of boundary wall on the land sold, post the act of purchase of land. The assessee has sufficiently demonstrated the said fact from the purchase deed of the land mentioning no boundary wall therein and the sale deed of the land mentioning the fact of the land having a boundary wall constructed therein. 14. Having said so, however, there is nothing on recordevidencing the fact of boundary wall, having been constructed in the year of purchase of land itself. I am of the belief therefore, that the assessee is entitled to the benefit of cost of improvement, though not to the extent claimed. Since the assessee has not been able to substantiate both the amount of investment made in the construction of the boundary wall and also the year in which the boundary wall was constructed, in the interest of justice, therefore, I hold that the benefit of cost of

P a g e | 7 ITA No.1798/JPR/2025 Rajendra Prasad Mundra improvement claimed by the assessee to the extent of Rs.6,20,750/- be restricted to Rs.4 lakhs and the remaining addition be confirmed. Thus, ground of appeal No.2 of the assessee is therefore partly allowed. 15. In effect, appeal of the assessee is partly allowed. Order pronounced in the Open Court on 22.07.2026

Sd/- (Annapurna Gupta) ACCOUNTANT MEMBER Dated 22.07.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur