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Facts
The assessee claimed a long-term capital loss on the sale of a jointly owned property, citing Rs. 8,13,882/- incurred towards development and maintenance after indexation. The Revenue authorities disallowed the claim, confirming an addition made by the Assessing Officer.
Held
The Tribunal held that the assessee's claim for expenditure on maintenance of the property could not be totally ruled out, considering the property was rented to a Government Department and similar treatment was given to co-owners. The addition made by the Assessing Officer and confirmed by the CIT(A) was not sustainable.
Key Issues
Whether the assessee's claim for expenditure on property development and maintenance, leading to a long-term capital loss, is admissible when documentary evidence is lacking but supported by circumstances and treatment of co-owners.
Sections Cited
250, 147, 144, 54F
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-SHRI T.R. SENTHIL KUMAR
PER DR. B.R.R. KUMAR, VICE-PRESIDENT : Delay Condoned.
This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as "CIT(A)" for short) dated 27.03.2025 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2013-14.
The assessee has raised the following grounds of appeal :-
1. On the fact and circumstances of the case the ld. CIT(A) has erred in sustaining the order passed by ld. AO which is bad in law and bad on facts and is contrary to the principles of natural justice. The proceedings u/s 147/144 are bad in law and bad on facts.
2. On the fact and circumstances of the case ld. CIT(A) has erred in confirming estimation made by ld. AO on account of long term capital gain at Rs.10,04,290/- as against shown by the appellant at capital loss Rs.2,13,882/- which resulted to an enormous taxation imposition on the assessee which is unfair and it should which is un fare and it should be deleted as it is bad in law and absurd. Therefore the addition deserve to be deleted.
3. On the fact and circumstances of the case Id. CIT(A) has erred in confirming the AO's act for not allowing cost of indexing and rejecting it out right, He also erred in disallowing claim of deduction u/s 54F He had ignored whole relevant facts and cases of co seller with the assessee he has passed the arbitrary order without any basis therefore it deserve to be cancelled.”
The assessee is a joint owner of an immovable property on which a Govt. School has been functioning. The assessee received an amount of Rs.6,00,000/- as his part of sale consideration. The Revenue determined indexed cost of acquisition at Rs.1,10,000/-.
3.1 The assessee submitted that over a period of nearly 20 years, substantial expenditure had been incurred towards development and maintenance of the property, which, after indexation, amounted to Rs. 8,13,882/-. Accordingly, the assessee declared a long-term capital loss of Rs. (-) 2,13,882/-.
3.2 Before the revenue authorities, the assessee could not submit the supporting bills and vouchers pertaining to the cost incurred for the development and maintenance cost. From the record, we find that it was a jointly owned property with other co-owners and the cost incurred in the case of co-owners has been accepted by the Revenue Department. It was also explained that the contractors who undertook the maintenance work had since expired, and therefore, the relevant documentary evidence could not be produced. This is a specific case where the co-owners are assessed at Rajasthan and no action has been taken by the Revenue Authorities.
3.3 Taking into consideration the entire aspects, including the fact that the building was rented to a Government Department, the factum of incurrence of expenditure on its maintenance cannot be ruled out. Keeping in view the quantum involved, the specificities of the case, and the treatment accorded by the Revenue in the cases of co- owners, we hold that assessee’s claim of having incurred such expenditure cannot be totally ruled out. Accordingly, the addition made by the Assessing Officer and confirmed by the Ld. CIT(A) is not sustainable.
In the result, the appeal of the assessee is allowed.
The order is pronounced in the open Court on 12.11.2025