RAJESH VRAJLAL DHANKI ,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX -CENTRAL CIRCLE 33(3), MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL
“D” BENCH, MUMBAI
BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND MS. PADMAVATHY S, ACCOUNTANT MEMBER
(Physical hearing)
Rajesh Vrajlal Dhanki
122, 1st Floor, Commerce House,
Dr. V. B. Gandhi Road Fort,
Kala Ghoda, Mumbai-400001. [PAN: AAAPD8581D]
Vs
ACIT, Central Circle –33(3),
607, C-12,Prathyaksha Kar Bhawan,
BKC, Bandra(E),
Mumbai-51
Appellant / Assessee
Respondent / Revenue
Assessee by Sh. Tejveer Singh, Advocate
Revenue by Sh. Annavaran Kosuri, Sr. DR
Date of hearing
09.07.2025
Date of pronouncement
28.07.2025
Order under section 254(1) of Income Tax Act
PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of Ld. CIT(A)/NFAC dated 31.05.2025 for assessment year (AY) 2014-15. The assessee has raised following grounds of appeal: “1. That the Ld. A.O and Ld. CIT (Appeals) has erred in both facts and law while passing the order. 2. That the Ld. A.O. and CIT (A) had erred in not passing a speaking order. 3. That the Ld. A.O and Ld. CIT (A) has erred in not considering the Bombay HC judgement in Pr. Commissioner of Income Tax-4 v. Kamal Jestaram Kapadia, allowing the cost of improvement incurred by assesse for making the flat habitable as similar to our case. 4. That the Ld. A.O and Ld. CIT (Appeals) has erred in not considering the cost of furniture and fixture as cost of Improvement of the flat wherein the flat was in raw state when delivered by the new builder to the assessee. Rajesh Vrajlal Dhanki 2
That the Id. A.O and Ld. CIT (Appeals) has erred in not excluding the furniture and fixture value from sales consideration while they disallowed the same as cost of improvement.” 2. Rival submissions of both the parties have been heard and record perused. The learned Advocate/ Authorised Representative (ld. AR) of the assessee submits that a very short dispute is involved in the present appeal. The assessing officer while passing the assessment order has not accepted certain part of cost of improvement being part of total cost of asset. The assessing officer disallowed Rs. 19,00,626/-, out of total cost of acquisition, details of which are recorded in para 8 of the assessment. Before assessing officer, the assessee furnished complete details and bifurcation of item wise cost along with relevant evidence. The assessee purchased a raw flat from Poonam Realtors. To make the flat habitable, the assessee spent / incurred various expenses which are inseparable and integral part of flat/ asset. During the course of hearing, the ld. AR of the assessee furnished item wise details and cost of such items and would submit that such cost was incurred on civil work, painting, various fixtures and fittings. Such expenses were incurred before taking possession and to make the flat as habitable. The assessee sold the flat / asset. The assessing officer accepted other component of cost of improvement except of Rs. 19,00,626/-. The assessee sold the flat along with all fixtures and fittings being integral part of the asset and it should be included in the cost of asset / flat. To support his submission, the ld. AR of the assessee relied upon the decision of Hon’ble Online Bom 18563 and the decision of Ahmedabad Tribunal in Rajat B Mehta vs ITO in ITA No. 19/Ahd/2016 dated 09.02.2018. 3. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the order of lower authorities. The ld. Sr. DR for the revenue submits that as per the definition of capital asset under section 2(14) of the Income Tax Act, furniture and personal assets are excluded from the definition. There are various items in the list provided by ld. AR of the assessee which cannot be considered as a part of capita asset like tube lights and bulbs, furniture, wall paintings and mandir. There is no evidence of all these items of extra work were part of subsequent sale deed executed by assessee. The ld Sr DR for the revenue prayed for dismissal of the appeal. 4. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We have also deliberated on various case laws relied by ld. AR of the assessee. We find that except this amount of Rs. 19.006 Lacs, the assessing officer has not disputed other cost of improvement. Before us, the ld. AR of the assessee furnished the details of various items which were disputed by lower authorities. All such details were also furnished during assessment proceedings. For appreciation of facts, the details are extracted / scanned below: Contractor/ Vendor
Work
Debit Amount.
Rs.000/
C. Bhogilal & Co.
General Items- Ivory Borders
3500
A.R. Interiors
False Ceiling
35800
Ceramic Corner
Tiles, Sanitaryware
102712
C.Tribhovandas&C o.
Ivory Tiles(Kitchen)
25750
Deepam Electricals Wirings
12000
East West Paints
Wall Paints
100000
Rajesh Vrajlal Dhanki
4
Services
Gayatri Glass
Mirrors and Corner pieces
17667
Green Hardware
Hardware Fittings and Adhesives
65000
Gulabchand R.
Bharadwaj
False ceiling and POP
95000
Harish Kapurai
Curtains
17500
Kapsons Ceramics
Indus
Mirror Polished Floor Tiles
373339
Karuna Kanthara
Interior Designing Fees
50000
Murtuza Paints &
Welding Centre
Cement Primers, Wood Polishings
125050
Omkar Lights
Tube lights and Bulbs
18595
Papu Kumar
Vishwakarma
Labour Charges and Carpentry
Charges
100000
Paradise Ceramics
Tiles and Fittings
34350
Prince Marble
White Marble for Mandir
31000
PRINCE
PLYWOOD
Plywood for Interior
162438
Purshottam De'cor
Mason work charges
65000
Purshottam
Decorators
Mandir De'cor Marble
180000
Rajeshwari
Sanitation
Sanitaryware
35400
Rekha Electricals
Wirings for the Flat
66800
Sai Plywood
Commercial Plywood
53025
Samir Ceramics
Bathroom Tiles and Ceramics
15000
Shivam Electricals
Wirings
11000
Shree Shivam
Electrical Switches and Wirings
3500
Swastik Ceramics
Basins
1700
Nita Singh
Consultancy
7500
Wicker World
Furniture
51000
Woodland Traders
Timber for Furniture
21000
Grand Total
19,00,626
5. On careful perusal of various items, we find that items like mirrors and corner pieces of Rs. 17,667/-, curtains of Rs. 17,500/, tube lights and bulbs of Rs.
18,595/- and furniture of Rs. 51,000/- cannot be considered / treated as integral or inseparable part of asset, therefore, the disallowance to that extent is confirmed. We find that rest of the items are part of permanent fixtures which necessary for making the raw house as habitable. The aggregate cost of such items is Rs. 1,04,762/-. Thus, out of total disallowance of Rs. 1,04,762/- are allowed and remaining of additions of Rs.
Rajesh Vrajlal Dhanki
5
17,95,864/- is allowed as a part of cost of improvement. In the result, grounds of appeal of assessee are partly allowed.
6. In the result, the appeal of the assessee is partly allowed.
Order was pronounced in the open Court on 28/07/2025 as per Rule
34 of Income Tax (Appellate Tribunal) Rules. PADMAVATHY S
ACCOUNTANT MEMBER PAWAN SINGH
JUDICIAL MEMBER
MUMBAI, Dated: 28/07/2025
Biswajit
Copy of the order forwarded to:
(1)
The Assessee;
(2)
The Revenue;
(3)
The PCIT / CIT (Judicial);
(4)
The DR, ITAT, Mumbai; and (5)
Guard file.
By Order