SNEHALATA TUPILI,HYDERABAD vs. ITO(INT TAXN)-2, HYDERABAD

ITA 2138/HYD/2025Status: DisposedITAT Hyderabad23 September 2026AY 2022-2311 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the full brokerage expenditure of Rs. 4,20,000/- should be allowed. Regarding the cost of improvement of the old villa, the Tribunal directed the AO to allow the balance claim of Rs. 7,14,000/-, considering that the property was sold as a constructed villa and the assessee, being an NRI, might not have retained all purchase bills. For the improvement expenditure on the new residential property, the Tribunal allowed the corpus fund of Rs. 3,50,000/-, as it was mandatory and intrinsically connected with the ownership. The glass expenditure of Rs. 1,54,307/- from M/s NGS Glass Works was allowed as it was supported by an invoice. The electrical works expenditure of Rs. 1,31,924/- from M/s Evora Home Decor was allowed in the absence of disproving material. The marble purchase of Rs. 18,691/- from M/s Om Marmo World Private Limited was also allowed, stating that the absence of a bank statement was not sufficient to reject the expenditure. However, the claim of Rs. 8,50,000/- towards labour and other expenses, including painting, was sustained as disallowed due to lack of identifiable bills, invoices, or receipts. The AO was directed to recompute the Long Term Capital Gains (LTCG) and consequential exemption under Section 54 accordingly.

What were the facts?

The assessee, Snehalata Tupili, an NRI, filed her return for Assessment Year 2022-23 declaring an income of Rs. 4,47,968/-. Her case was selected for scrutiny to verify claims of deduction under Section 54/54F and low income from other sources. The Assessing Officer (AO) examined the assessee's claim of exemption under Section 54 arising from the sale of Villa No. 86 for Rs. 5 crores. The assessee claimed brokerage of Rs. 4,20,000/-, cost of improvement of the old property of Rs. 10,20,000/-, and expenditure for improvement of the new property. The AO disallowed the full brokerage, allowed only 30% of the old property's improvement cost, and declined the claim for improvement of the new property. The Dispute Resolution Panel (DRP) restricted the brokerage disallowance to Rs. 2,00,000/- and the new property improvement disallowance to Rs. 10,75,142/-, while sustaining the disallowance of the balance cost of improvement of the old property. The AO passed the assessment order giving effect to the DRP's directions.

What were the issues?

1. Whether the disallowance of commission paid to Shri. Prabhudhan Reddy, a sum of Rs. 2,00,000/-, out of the total paid of Rs. 4,20,000/-, is legally sustainable? (Question of law and fact, concerning Section 143(3) r.w.s 144C(13) of the Act). The assessee argued that the full commission paid should be allowed. The revenue, through the AO and DRP, disallowed a portion of it. 2. Whether the disallowance of the Cost of Improvement of the Asset Sold, amounting to Rs. 7,14,000/-, on an adhoc basis (disallowing 70% of the claim), is justified? (Question of law and fact, concerning Section 54 of the Act). The assessee contended that the entire amount claimed as cost of improvement for the old property should be allowed, relying on judicial decisions. The revenue disallowed a significant portion. 3. Whether the disallowance of the Cost of Improvement of the "NEW Asset purchased" for glass works from M/s. Evora Home Décor Electrical Works (Rs. 1,31,924/-), M/s. NGS Glass works (Rs. 1,04,307/-), Marble for Pooja Room from M/s. Om Marmo world pvt ltd (Rs. 18,691/-), and labour/other expenses (Rs. 8,50,000/-) is legally correct? (Question of law and fact, concerning Section 54 of the Act). The assessee argued that these costs were incurred for bringing the new asset into a residential house and should be allowed. The revenue disallowed these amounts, citing lack of evidence of payment or verification. 4. Whether the disallowance of the payment of Rs. 3,50,000/- towards Corpus Fund for common areas and amenities in the Gated Community is correct, considering it is an integral part of ownership? (Question of law and fact, concerning Section 54/54F of the Act). The assessee argued this corpus fund forms part of the cost of the residential villa purchased. The revenue did not consider it as part of the cost of acquisition.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 54,Section 54F,Section 139(4),Section 154,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES, HYDERABAD

Before: SHRI MANJUNATHA G, HON’BLE & SHRI RAVISH SOOD, HON’BLE

For Respondent: Shri Waseem UR Rehman, CIT-DR

PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Assessing Officer (for short, ‘AO’) under Section 143(3) r.w.

Section 144C(13) of the Income Tax Act, 1961 (for short, ‘Act’), dated 25.11.2024 for A.Y. 2022-23. The assessee has assailed the impugned order o

The order continues below.

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