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Facts
The assessee's appeal stems from an order by the CIT(A) for the assessment year 2014-15. The assessee challenged the validity of the notice issued under section 143(2) and the subsequent order under section 143(3), as well as the disallowance of indexed cost of improvement.
Held
The assessee did not press the ground related to the validity of the notice under section 143(2). Regarding the indexed cost of improvement, the tribunal allowed the indexed cost for the years 1981-82 and 1983-84, but disallowed it for 1990-91, considering it impossible to incur such expenditure in that period.
Key Issues
Whether the notice u/s 143(2) was invalid due to limitation, and whether the indexed cost of improvement claimed by the assessee was admissible.
Sections Cited
143(2), 143(3), 48, 50C, 54EC, 54
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
Date of Hearing – 28/01/2025 Date of Order – 17/02/2025
O R D E R PER K.M. ROY, A.M.
This appeal by the assessee is emanating from the impugned order dated 29/07/2024, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2014–15.
In its appeal, the assessee has raised following grounds:–
“(1) That the notice issued u/s 143(2) is invalid and without jurisdiction, since barred by limitation and consequently the order passed u/s 143(3) of the I.T. Act, 1961 by the learned assessing officer is bad in law and on facts. On the facts and circumstances of the case, the learned CIT(A) erred in law and on facts in holding that the revised return is a valid return and consequently the notice issued u/s 143(2) is just & proper. (2) That the learned CIT(A) erred in law and on facts in confirming the action of the assessing officer in not allowing deduction of indexed cost of 2 Geetadevi Badrinarayan Panpaliya ITA no.477/Nag./2024 improvement of Rs.15,21,584/- (50% share of Rs.30,43,168/-) in computing long-term capital gain u/s 48 on the ground that the assessee has failed to furnish evidence in support of expenditure claimed. On the facts and circumstances of the case, both the lower authorities failed to appreciate that the house purchased was an old house and renovation was made to make it habitable which is supported by evidence. (3) That for any other ground with kind permission of your honour at the time of hearing of appeal.”
During the course of hearing, the learned Authorised Representative appearing for the assessee submitted that he did not wish to press ground no.1. The learned Departmental Representative has not raised any objection. Accordingly, ground no.1, raised by the assessee stands dismissed as “not pressed”.
Insofar as ground no.2 is concerned, the learned Authorised Representative for the assessee invited our attention to Page–1 of the Paper Book which is placed on record. The computation of long term capital gain is tabulated below:–
Property Jointly held by Smt. Geetadevi Panpaliya & Shti Ashok Panpaliya: Capital Gain on sale of Residential Property – Building at Ramdaspeth Sale Price as on 16/01/2014 (1,62,50,000 2,43,75,000 + 81,25,000) Value adopted or assessed by Stamp 2,43,75,000 Valuation Authority Deemed value of asset being greater of 2,43,75,000 the above two (sec. 50C) Less: Indexed Cost of Acquisition (235200 x 939/100) 22,08,528 (Cost as on 01/04/1981 – ` 2,35,000 Indexed Cost of improvement in 1981–82 9,62,006 (1,02,450 x 939 / 100)
3 Geetadevi Badrinarayan Panpaliya ITA no.477/Nag./2024
Indexed Cost of improvement in 1983–84 12,00,463 Indexed Cost of improvement in 1990–91 (1,48,300 x 939/116) Indexed Cost of improvement in 1990–91 (1,70,700 x 939 / 182) 8,80,699 30,43,168 4,21,450 1,91,23,304 Long Term Capital Gain 95,61,652 (Rs.19123304 x 50.00% Share of assessee) Less: Exemption claimed u/s 54EC – ` 50,00,000 invested in Bonds 50,00,000 of NHAI / REC. (within a period of 6 months after the date of Transfer / Sale) u/s 54 – ` 6,75,502 invested in Residential Property (within a period of 1 6,75,502 year before the date of Transfer / Sale) u/s ___ ` 19,50,000 invested in Capital Gain a/c scheme (within a period of due 19,50,000 date of furnishing the return) Long Term Capital Gain 19,36,150
The learned Authorised Representative for the assessee submitted a brief note upon the dispute in hand to buttress his submissions. He further submitted following evidences before us for consideration.
Sr. Name of Document no. 1. Computation of Long Term Capital Gain 2. Sale Deed Dated 16/01/2014 for ` 1,62,50,000 (To Dilip & Jagruti Doshi) 3. Sale Deed Dated 16/01/2014 for ` 81,25,000 (To Laxminarayan & Chanchal Sharma)
The learned Departmental Representative retorted that the details are bereft of any corroborative evidences and are neither reliable nor authentic.
4 Geetadevi Badrinarayan Panpaliya ITA no.477/Nag./2024
We have given a dispassionate hearing to the averments before us. The learned CIT(A) had disallowed the cost of improvement in the absence of any audit trail linking to any Bank a/c or books of account. However, it is manifest that the property was constructed in the year 1954 and requires renovation to make it habitable. Accordingly, it is deemed fit to allow indexed cost of expenditure for the year 1981–82 and 1983–84 only since it was personate to the date of purchase on 31/03/1980. However, it is quite impossible to incur such expenditure in the year 1990–91. So, the assessee gets part relief of ` 10,81,234 and the disallowance gets scaled down to 4,40,350. Thus, ground no.2, raised by the assessee is partly allowed.
In the result, assessee’s appeal stands partly allowed. Order pronounced in the open Court on 17/02/2025