BHUPENDER SINGH,GURGAON vs. ACIT-INT-TAX, GURGOAN

ITITA 49/DEL/2025Status: DisposedITAT Delhi02 April 2026AY 2023-248 pages
AI SummaryPartly Allowed

What were the facts?

The assessee, a Non-Resident Indian and tax resident of the UK, filed an appeal against the Final Assessment Order dated 26.09.2025 for Assessment Year 2023-24. The Assessing Officer (AO) disallowed a claim of Rs. 20,05,395/- (indexed) towards the cost of improvement for three immovable properties sold during the year. The AO's reasoning was that the conveyance deeds indicated the properties were handed over in a fully habitable condition, negating the need for improvements. The assessee had submitted bank statements and Paytm screenshots, and later filed additional evidence including invoices and contractor confirmations before the Dispute Resolution Panel (DRP). The DRP directed the AO to examine these documents and allow relief to the extent explained. However, the AO completed the assessment disallowing the original claim and also the additional claim of Rs. 25,29,875/-.

What did the Tribunal hold?

The Tribunal disagreed with the AO's reasoning that properties handed over in a fully habitable condition do not require improvements. It held that being habitable does not preclude an assessee from making further improvements as per their requirements and claiming the cost incurred under Section 48(ii) of the Act. The Tribunal noted that the assessee had filed necessary evidence before the AO, which was rejected. While the claim is allowable under Section 48(ii), it requires factual verification, which was not done by the AO or the DRP. Therefore, in the interest of justice, the Tribunal set aside the AO's order and restored the matter to the AO's file. The AO was directed to allow the assessee's claim for indexed cost of improvement, which aggregated to Rs. 45,35,270/- (Rs. 20,05,395/- + Rs. 25,29,875/-), after examining the evidence and providing a reasonable opportunity of being heard. The assessee was granted liberty to furnish further evidence. Grounds of appeal 5 to 8 were allowed for statistical purposes. Grounds 1 to 4 were dismissed as not pressed.

What were the issues?

1. Whether the AO erred in disallowing the claim of Rs. 20,05,395/- towards the cost of improvement in respect of three immovable properties (Palm Square, Hyde Park Estate, and Navyug CGHS), despite the assessee providing documentary evidence before the AO and DRP, turning on Section 48(ii) of the Income Tax Act, 1961. 2. Whether the AO erred in not allowing the claim of Rs. 237,76,696/- (indexed) for cost of improvement, when documents indicated an expenditure of Rs. 29,82,837/- towards improvements, and failing to comply with the DRP's directions to allow relief based on documentary evidence, turning on Section 144C(13) of the Income Tax Act, 1961. Assessee's Contentions: The assessee argued that the indexed cost of improvement is allowable under Section 48(ii) of the Act. The properties were handed over in a bare shell condition, and improvements like office fit-outs, modular kitchens, and enhanced electrical fittings were made. Bank statements, Paytm screenshots, invoices, LOI, and contractor confirmations were submitted. The AO erred in disallowing the entire claim and not considering the additional claim filed before the DRP. The AO also failed to adhere to the DRP's directions. Revenue's Contentions: The Revenue relied on the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 48(ii),Section 143(3),Section 144C,Section 144C(6),Section 144C(7),Section 144C(8),Section 144C(13)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH, D: NEW DELHI

Before: SHRI VIKAS AWASTHY & SHRI BRAJESH KUMAR SINGH

For Appellant: Shri Ajay Wadhwa, Adv, Ms. Chetna Jain, Adv. &, Shri Paritush Jain, Adv
For Respondent: Shri M.S. Nethrapal, CIT(DR)
Hearing: 02.04.2026Pronounced: 02.04.2026

PER BRAJESH KUMAR SINGH, AM,

This appeal filed by the assessee is directed against the Final Assessment Order dated 26.09.2025 (FAO) passed u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), for the A.Y. 2023-24,

IT(IT)A No.49/Del/2025 . pursuant to the directions of the ld DRP under section 144C of the Act dated 21.08.2025. 2. Brief facts of the case: The assessee was a Non-Resident Indian and a tax resident of UK during the year. During the year under consideration, the assessee had declared income of Rs. 2,99,54,700/- under th

The order continues below.

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