SUSHMA KAPUR,DELHI vs. ITO, NFAC

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’, NEW DELHI BEFORE SH. SATBEER SINGH GODARA, JUDICIAL MEMBER AND SH. NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 7294/Del/2025 (Assessment Year : 2020-21) Smt. Sushma Kapur Vs. Assessment Unit, NFAC A-1/46, Safdarjung Enclave, Ward – 32(1) New Delhi – 110 029 New Delhi – 110 002 PAN No. AAGPK 0637 F (APPELLANT) (RESPONDENT) Assessee by Shri Vinay Bahl, Adv. Revenue by Shri Om Prakash, Sr. D.R. Date of hearing: 08.04.2026 Date of Pronouncement: 08.04.2026

ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER : This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals)-NFAC-Delhi [‘CIT(A)’ in short] dated 29.09.2025 arising from the assessment order dated 23.09.2022 passed by the NFAC, Delhi under Section 143(3) r.w.s 144B of the Income Tax Act, 1961 (‘the Act’) concerning Assessment Year (A.Y.) 2020-21.

ITA No. 7294/DEL/2025 [A.Y 2020-21] Sushma Kapur vs. ITO 1. “That the orders passed by the Assessing Officer and the CIT Appeals (Faceless) are bad in law and against the facts of the case and are void. 2. That the Assessing Officer was wrong to make disallowance of Rs.84,99,803/- to the income of the appellant on account of recalculation of the indexed cost claimed by the appellant under the head Long Term Capital Gains, according to his own methodology and on the basis of some old/redundant provisions. 3. That the orders also does not describe the Authority passing the orders, therefore suffers from gross defect. 4. That the method of calculation of the impugned disallowance is erroneous, without any logic and purely based on presumptions, without bringing on records any cogent material to support the impugned disallowance. 5. That the method of calculation of the LTCG adopted by the AO is defective and against the provisions of law applicable, on the date of determination of capital gains/the assessment year. 6. That the impugned additions have been made ignoring the facts, evidence and documents placed on record during the assessment. 7. That the basis adopted by the AO to make the impugned addition is illegal and has no legs to stand upon. Prayer That since, as submitted above, the impugned additions/disallowances are illegal, without any firm basis, based on presumptions and it is prayed that the additions/disallowances made by the Assessing Officer be deleted.” 3. Brief facts of the case is that the assessee, an individual, filed her return of income for the Assessment Year 2020-21, declaring a total income of Rs. 9,92,990/-. The case was selected for scrutiny under CASS owing to large investments in immovable property reported through Form 26QB in comparison with the declared income and also due to substantial claims of exemptions under sections 54 and 54F of the Income Tax Act, 1961. 4. In the course of assessment proceedings, the AO observed that the assessee had sold a shop at Munirka, New Delhi, for Rs.44,00,000/-, which was inherited from her late husband, and

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ITA No. 7294/DEL/2025 [A.Y 2020-21] Sushma Kapur vs. ITO claimed exemption under section 54F by investing in a new residential property purchased on 27.11.2019 for Rs. 3.30 crore. The AO allowed the exemption as conditions were satisfied. 5. However, in respect of the capital gains arising from the sale of residential property at Safdarjung Enclave, jointly held with her sister-in-law Smt. Nutan Kapoor, the AO made a dispute. The assessee, on sale of Safdarjung Enclave property, declared an indexed cost of acquisition at Rs. 1,73,40,000/- and claimed exemption under section 54 for Rs. 2,97,56,000/-. The AO, considered the original acquisition cost in 1963 at Rs. 22,910/-, found from the DDA allotment letter, the construction cost as per the valuation report, calculated the FMV as on 01.04.2001, and computed the indexed cost of acquisition at Rs. 67,44,197/-. Accordingly, the AO worked out the taxable capital gain at Rs. 84,99,803/- and added the same to the total income of the assessee u/s 143(3) r.w.s 144B of the Act. On appeal the CIT(A) upheld the addition. The aggrieved assessee is before us. 6. The Id counsel of the assessee stated that the substantive issue for adjudication in the instant case is the calculation of cost of acquisition of land as on 01.04.2001. It is submitted that the assessee has relied upon the Valuation report prepared by the Registered

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ITA No. 7294/DEL/2025 [A.Y 2020-21] Sushma Kapur vs. ITO valuer dated 18.10.2019 for determining the cost of land as on 01.04.2001 at Rs. 1,21,31,0000/-. It is submitted that the AO's approach of using the DDA 1981 rates, indexing to 2001, and further indexing to the current year was arbitrary, legally unsound, and unsupported by the Income Tax Act. Further, it is stated that both she and her co-owner, Smt. Nutan Kapoor, had declared identical values for the Safdarjung Enclave property, which had been accepted in her co-owner's case. 7. We have heard the rival submissions and perused the material on record. We find the issue for adjudication is the manner on which the value of land as on 01.04.2001, is computed. We find that the assessee has furnished the valuation report prepared by a Registered Valuer dated 18.10.2019 who had valued the said property by adding the cost of land (Rs 60,00,000/-, assessee's share of 50%) and cost of construction (Rs 21,02,000/-). We find that the AO accepted the cost of construction but disputed the cost of land. We note that the Registered Valuer adopted the rate of Rs 39,645/- per sq. meter as 01.04.2001 whereas the AO adopted the rate at Rs 12,699 per sq. mt. 8. We are of the considered view that the valuation of land as on 01.04.2001 adopted by the AO is not supported by any cogent and corroborative evidence. The AO has not given any cogent reason as to

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ITA No. 7294/DEL/2025 [A.Y 2020-21] Sushma Kapur vs. ITO how the valuation of land adopted by the Registered valuer, is not acceptable. We therefore consider the approach of the AO of adopting the indexation method for finding the FMV of the land as on 01.04.2001, as arbitrary and not legally sound. Further, the co- owner, Smt. Nutan Kapoor, had declared identical values for the Safdarjung Enclave property, which has been accepted in her co- owner's case. Once the value of land declared by the co-owner is accepted, there is no reason to deviate from the valuation adopted by the assessee, the other co-owner. The capital gains deduction u/s 54/54F disallowed by the AO is reversed. The grounds are allowed. 10. In the result, appeal of the assessee ITA No. 7294/DEL/2025 is allowed. Order pronounced in the open court on 08.04.2026

Sd/- Sd/- (SATBEER SINGH GODARA) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 01.07.2026 Priti Yadav, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Page 5 of 6