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Facts
The assessee purchased land and constructed a house, later selling both. The Assessing Officer disallowed the cost of improvement, making an addition of Rs.16,75,627/-. The AO's computation of construction cost was based on a chart that extended the construction period unrealistically.
Held
The Tribunal held that the Assessing Officer's method of determining the cost of improvement, by extending the construction period to 13 years based on a chart, was not supported by facts. The construction period could not have been so prolonged.
Key Issues
Whether the Assessing Officer's method of determining the cost of improvement by arbitrarily extending the construction period is valid.
Sections Cited
250
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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: DR. B.R.R. KUMAR, VICE-MS SUCHITRA RAGHUNATH KAMBLE
O R D E R
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:
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 “Ld. CIT(A)”] dated 28.03.2024, under section 250 of the Income-tax Act, 1961 [in short “the Act”] for the Assessment Year 2013-14.
The Assessing Officer made addition of Rs.16,75,627/- by disallowing the cost of improvement. The facts of the case are that assessee purchased land for Rs.1,30,000/- during the year 2005-06 and constructed a house and sold the house along with the land in the year 2013-14 after a period of 8 years for Rs.45,25,000/-.
Before the Assessing Officer, the assessee has submitted the statement of contractor and balance sheet in which the value of plot and construction thereof shown at Rs.20,65,500/-. The same are not in dispute. Hence, we are unable to find the action Asst. Year: 2013-14 - 2 of the Assessing Officer determining cost of construction @900 taken in the year 2018- 19. The chart made by the Assessing Officer is as under: F.Y. Cost of F.Y. Cost of Construction Construction 2018-19 800 2010-11 344 2017-18 720 2009-10 310 2016-17 648 2008-09 279 2015-16 583 2007-08 251 2014-15 525 2006-07 226 2013-14 472 2005-06 203 2012-13 425 2004-05 183 2011-12 383 2003-04 164.71
Acceptance of the chart by Assessing Officer, would give effect cost that the house is being constructed from 2003-04 to 2018-19. It cannot be supported the house has built for a period of 13 years, hence, the computation made by the Assessing Officer determining the cost of improvement cannot be accepted.
In the result, the appeal of the assessee is allowed. The order is pronounced in the open Court on 23.01.2026.