TRIPATHI ABHISHEK,UTTAR PRADESH vs. INCOME TAX OFFICER, NOIDA

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ITA 767/DEL/2026Status: DisposedITAT Delhi13 July 2026AY 2020-214 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal allowed 50% of the claimed cost of improvement on an estimated basis, considering the property was old. For the Section 54 deduction, the issue was restored to the AO for de novo examination, acknowledging potential delays in project completion beyond the assessee's control.

What were the facts?

The assessee, a Non-Resident Indian, sold a property and claimed cost of improvement and deduction under Section 54. The Assessing Officer disallowed both claims for lack of evidence. The CIT(A) upheld the disallowances, stating that bare assertions and lack of a registered purchase deed were insufficient.

What were the issues?

Whether the disallowance of cost of improvement without any documentary evidence is justified, and if a deduction under Section 54 can be claimed without a registered purchase deed, considering potential project delays.

Which sections of the Income-tax Act were involved?

Section 148,Section 54,Section 147,Section 144C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI

Before: VIKAS AWASTHY

For Respondent: Shri Manoj Kumar, Sr. DR

PER VIKAS AWASTHY, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), Noida-2 [in short ‘the CIT(A)’] dated 28.11.2025, for Assessment Year 2020- 21.

2.

Shri Ankur Kapil, appearing on behalf of the assessee submits that the assessee is a Non-Resident Indian. During the year under consideration, the assessee sold an immovable property for Rs.60,00,000/-. In response to notice u/s.148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 31.03.2024, the assessee filed return of income on 25.04.2024 declaring total income of Rs.4,98,620/-. While computing capital gain on sale of the said property, the assessee had claimed cost of improvement of Rs.5,10,000/- and deduction of Rs.14,81,333/- u/s.54 of the Act. The Assessing Officer (AO) disallowed both the claims for want of documentary evidence and, vide assessment order dated 06.02.2025 passed u/s.147 r.w.s.144C(3) of the Act, assessed the total income of the assessee at Rs.24,89,953/-. Aggrieved,

ITA 767/DEL/2026 TRIPATHI ABHISHEK the assessee carried the issue in appeal before the CIT(A). In respect of the cost of improvement, it was submitted before the CIT(A) that the renovation of the property was carried out in the year 2003-04. On account of the passage of time and closure of the bank account operated at the relevant time, no invoices or bank statements evidencing the expenditure are available, and that the claim be allowed on the basis of a reasonable estimate. In respect of the deduction claimed u/s.54 of the Act, it was submitted that the new residential property was purchased jointly by the assessee with his father and wife vide agreement for sale dated 06.01.2020 and that the instalment of Rs.14,81,333/- towards the assessee’s share was paid by the assessee’s father as a gift, duly supported by the father’s bank statement and a declaration of gift executed by the father. The CIT(A) rejected both the contentions and upheld the additions, holding, firstly, that a bare assertion unsupported by documentary evidence cannot justify the claim of cost of improvement, and secondly, that in the absence of a registered purchase deed, the assessee could not be said to have ‘purchased’ the new residential property within the meaning of section 54 of the Act, irrespective of the source of funds utilised for the purchase.

3.

Per contra, Shri Manoj Kumar, representing the department supported the orders of the authorities below and submitted that the assessee has no furnished any documentary evidence in support of the cost of improvement, nor has he furnished the registered purchase deed of the new residential property to substantiate the claim of deduction u/s.54 of the Act. The ld. DR prayed for dismissing appeal of the assessee

4.

Both sides heard, orders of the lower authorities examined. In respect of the addition of Rs.5,10,000/- on account of disallowance of cost of improvement, it is not in dispute that the assessee has not furnished any invoices, bills or bank statements to substantiate the exact quantum of expenditure incurred, the renovation having admittedly taken place in the year 2003-04. At the same time, it cannot be lost sight of that the property was admittedly old and that some measure of renovation would ordinarily have been required to render it habitable. Complete disallowance of the claim, in such circumstances, would be too harsh a view to take, while acceptance of the entire claim, in the absence of any supporting material, would equally not be justified. In the totality of facts and circumstances of the case, I deem it fit and appropriate to allow 50% of the cost of improvement claimed by the assessee, i.e., Rs.2,55,000/, on an estimate basis, and to sustain the disallowance to the extent of the remaining Rs.2,55,000/.

5.

In so far as the addition of Rs.14,81,333/- on account of disallowance of deduction claimed u/s.54 of the Act is concerned, both the authorities have held that the purchase deed for

ITA 767/DEL/2026 TRIPATHI ABHISHEK new property was not furnished by the assessee to substantiate investment of capital gain in new residential house. In the assessment order, the AO has observed that the assessee has only furnished copy of agreement to sale between ATS Homes P. Ltd. indicating purchase of property for Rs.1,11,10,000/- during the year under consideration. A perusal of Agreement to Sale at pages 59 to 95 of the paper book would show that the said agreement dated 06.01.2010 is in respect of proposed flat bearing no. 31281 on 28th floor of Tower 31 in the project developed by ATS Homes P. Ltd. on Plot no. SC-01/01, Sector 152, Noida. If the assessee is able to substantiate that the assessee has made investment of capital gain to acquire a residential property, within the time prescribed, the assessee is eligible to claim deduction u/s.54 of the Act. The delay in completion of housing project and handing over of flat to the assessee is beyond the control of assessee. Hence, completion and handing over of new residential house to the assessee by developer is inconsequential. I deem it appropriate to restore this issue to the AO for denovo examination of the claim, in light of above findings and decide the issue, in accordance with law.

6.

In the result, appeal of the assessee is partly allowed.

Order pronounced in the open court on Monday the 13th of July, 2026.

Sd/- VIKAS AWASTHY JUDICIAL MEMBER Delhi Dated: 13-July-2026

ITA 767/DEL/2026 TRIPATHI ABHISHEK

Copy to: TRIPATHI ABHISHEK, A5 904 OLIVE COUNTY ,SECTOR 5, 1 VASUNDHARA, GHAZIABAD-201012, UTTAR PRADESH INCOME TAX OFFICER, 2 DDIT/ADIT( IN TAX.) NOIDA-201307, UTTAR PRADESH 3 THE PCIT / CIT, 4 THE D.R., ITAT, DELHI BENCH 5 GUARD FILE

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