DY. COMMISSIONER OF INCOME TAX(INTERNATIONAL TAXATION)-1, AHMEDABAD, AHMEDABAD vs. THOMAS MYLADIYIL AUGUSTINE, AHMEDABAD

ITA 1131/AHD/2026Status: DisposedITAT Ahmedabad30 September 2026AY 2022-234 pages
AI SummaryDismissed

What were the facts?

The Revenue has appealed against an order dated 03/02/2026 passed by the CIT(A), Ahmedabad-13. The CIT(A) had partly allowed an appeal against an assessment order dated 09/05/2024, passed under Section 143(3) r.w.s 144C of the Income Tax Act, 1961, for Assessment Year 2022-2023. The Revenue's appeal challenges the CIT(A)'s decision to confirm a disallowance of Rs. 73,78,074/- related to interest on borrowed capital and the deletion of an addition of Rs. 90,73,291/- made on account of disallowance of deduction claimed under Section 54. The assessee is Thomas Myladiyil Augustine, and the appellant is the Dy. Commissioner of Income Tax (International Taxation)-1, Ahmedabad.

What did the Tribunal hold?

The Tribunal noted that the assessee's Authorized Representative submitted that the tax effect in the appeal was below the specified threshold. The Departmental Representative stated the tax effect as INR 73,56,605/- as per the Memorandum of Appeal. The Tribunal observed that the Assessing Officer had made aggregate additions of INR 1,64,51,365/-. The assessee's Authorized Representative calculated the tax effect at INR 42,77,356/-. Citing CBDT Circular No. 9 of 2024 dated 17/09/2024, which enhances the monetary limit for departmental appeals to INR 60 Lakhs, the Tribunal found that the tax effect, as per the assessee's computation, was below this limit. Consequently, the appeal was dismissed as 'withdrawn/not pressed' in terms of the circular. The Revenue was granted liberty to file a Miscellaneous Application for recall if, upon re-verification, the tax effect was found to be higher than the specified monetary limit.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on facts in confirming the disallowance of Rs. 73,78,074/- by holding that interest on borrowed capital utilized for acquisition of land and construction of a house does not form part of the cost of acquisition/cost of improvement under Section 48 of the Income-tax Act, 1961, despite no deduction being claimed under Section 24(b) or any other provision, resulting in denial of a legitimate cost. 2. Whether, on the facts and in the circumstances of the case, the Learned CIT(A) erred in law and on facts in deleting the addition of Rs. 90,73,291/- made on account of disallowance of deduction claimed under Section 54 of the Income-tax Act, 1961, despite the assessee's failure to substantiate the cost of construction with primary evidences such as bills, vouchers, and architect's certificate. 3. Whether, on the facts and in the circumstances of the case, the Learned CIT(A) erred in granting relief under Section 54 when the cost of construction could not be reliably ascertained in the absence of verifiable documentary evidence, thereby rendering the quantum of deduction indeterminate. 4. Whether, on the facts and in the circumstances of the case, the Learned CIT(A) failed to appreciate that the deduction under Section 54 is intrinsically linked with the computation of indexed cost of acquisition and resultant long-term capital gain, and in the absence of proper substantiation of investment, no deduction was allowable. Assessee's contention: The tax effect involved in the appeal is below the specified threshold, and therefore, the appeal should be dismissed. Revenue's contention: The Memorandum of Appeal states the tax effect is INR 73,56,605/-. The Assessing Officer made aggregate additions of INR 1,64,51,365/-.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C,Section 48,Section 24(b),Section 54

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, D” BENCH, AHMEDABAD

Per Rahul Chaudhary, Judicial Member:

1.

The present appeal has been preferred by the Revenue against the Order, dated 03/02/2026, passed by the Commissioner Of Income Tax, Appeal, Ahmedabad-13 [hereinafter referred to as the ‘CIT(A)’] whereby the Learned CIT(A) had party allowed the appeal against the Assessment Order, dated 09/05/2024, passed under Section 143(3) r.w.s 144C of the Income Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2022-2023. 2. The Revenue has raised

The order continues below.

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