“cost of improvement”

Capital GainsSection 55Section 55749 judgments

The decision most relied on for cost of improvement is CIT v. Kasturi Estates (P.) Ltd. (62 ITR 578), cited in 25 judgments on BharatTax.

Leading authorities on cost of improvement

CIT v. Kasturi Estates (P.) Ltd.

62 ITR 578 · 1966 · High Court

citing judgments

Expenditure incurred to improve property before sale, such as dividing land into plots and laying roads, does not constitute an adventure in the nature of trade if the primary purpose is to obtain a better price for the property.

Arunachalam v. CIT

227 ITR 222 · 1997 · Supreme Court

citing judgments

Expenditure incurred by an assessee to discharge a mortgage created by a previous owner is an allowable deduction in computing capital gains, as it represents the cost of acquisition or perfecting an imperfect title. The assessee's payment to clear the encumbrance is not deductible for capital gains computation.

Commissioner of Income-tax v. Miss Piroja C. Patel

242 ITR 582 · 2000 · High Court

citing judgments

Compensation paid to hutment dwellers for vacating land is an allowable expenditure in computing capital gains, as it relates to the transfer of the asset. Such payments are considered a cost of acquisition or improvement under Section 48 read with Section 55 of the Income-tax Act, 1961.

Naozar Chenoy v. CIT

234 ITR 95 · 1998 · High Court

citing judgments

Expenditure incurred to pay tenants to vacate premises, which are the subject of a sale transaction, is allowable as a deduction in computing capital gains. This is because the expenditure is directly connected to and necessary for effecting the transfer of the property.

Mahindra & Mahindra Ltd. v. DCIT, 313 ITR (AT) 263 (SB)

110 ITD 59 · 2008 · ITAT

citing judgments

The Assessing Officer cannot improve his assessment by adopting a new theory during reassessment proceedings.

Mrs. June Perrett v. Income-tax Officer

298 ITR 268 · 2008 · High Court

citing judgments

Payment made to secure an order of eviction and evict an unauthorized occupant can be treated as a cost of improvement.

Judgments citing cost of improvement

Vazhoor Sudarsanan Thampi, Thrissur vs. Income Tax Officer, (International Taxation), Ward-2(1), Bengaluru

Appeal is partly allowed

ITA 893/BANG/2025[2015-16]Status: DisposedITAT Bangalore28 Aug 2025AY 2015-16

Bench: Shri Prashant Maharishi & Shri Soundararajan Ka. Y. 2015-16 Appellant Respondent Vazhoor Sudarshanan The Income Tax Officer Thampi International Taxation Vazhoor House, Ward 2 (1) T C 5/1892Valappad Bangalore Vallapad Beach Thrissur Kerala 680567 Pan Afxpt6193D For Appellant Shri Sidhesh N Gadi, Ca For Respondent Dr. Divya K J Cit Dr Date Of Hearing 19-08-2025 Date Of Pronouncement 28-08-2025

Section 142Section 143Section 144Section 144CSection 147Section 148Section 148ASection 69

shares is allotted price by those companies. Naturally in absence of any increase in the price of the shares or any cost of improvements claimed by the assessee, cost is bound to remain same till those shares are sold. Thus, addition

Raju Joseph Vayalat, Ernakulam vs. ITO, Ward-2(5), Kochi

In the result, the appeal of the assessee is dismissed

ITA 273/COCH/2024[2013-2014]Status: DisposedITAT Cochin26 Aug 2025AY 2013-2014

Bench: Shri Inturi Rama Rao & Shri Sonjoy Sarma

Section 133(6)Section 143(3)Section 68

under Section 68 of the Act. The AO further observed that the assessee had sold land for Rs. 44,39,000 and claimed cost of improvement of Rs. 35,77,949 while computing capital gains. Since no supporting evidence for the cost of improvement was produced, the AO rejected ... before the ld. CIT(A). However, he failed to substantiate his claims or produce documentary evidence either regarding the unexplained credits or the cost of improvement. The ld. CIT(A), therefore, confirmed the additions made by the AO and dismissed the appeal. At the time of hearing before us, there

Vimal Kumar Banka, Kanpur vs. ITO Ward-1(2)(1), Kanpur

The appeal of the assessee is allowed

ITA 25/LKW/2024[2012-13]Status: DisposedITAT Lucknow25 Aug 2025AY 2012-13

Bench: Shri. Sudhanshu Srivastavaassessment Year: 2012-13 Vimal Kumar Banka V. The Ito 5/P/25, Dabauli Ward 1(2)(1) Kanpur Kanpur Tan/Pan:Afzb1801J (Appellant) (Respondent) Appellant By: Shri Rakesh Garg, Advocate Respondent By: Shri Sunil Kumar Rajwanshi, D.R. O R D E R This Appeal Has Been Preferred By The Assessee Against Order Dated 24.11.2023, Passed By The National Faceless Appeal Centre, Delhi (Nfac) For Assessment Year 2012-13. 2.0 The Brief Facts Of The Case Are That As Per The Assessing Officer (Ao), The Assessee Had Not Filed The Return Of Income For The Year Under Consideration. The Income Tax Department Was In Possession Of Information That The Assessee Had Sold An Immovable Property, Jointly Held With Mrs Kanchan Talwar, During The Year Under Consideration For A Consideration Of Rs.10,00,000/- & The Value Of The Same As Per The Stamp Valuation Authority Was Rs.23,15,000/-. The Assessing Officer (Ao), Therefore, Reopened The Case Of The Assessee Under Section 147 Of The Income Tax Act, 1961 (Hereinafter Called “The Act’)

For Appellant: Shri Rakesh Garg, AdvocateFor Respondent: Shri Sunil Kumar Rajwanshi, D.R

Section 142(1)Section 144Section 144BSection 147Section 148Section 148(2)Section 151

only 50% of share in the said immovable property, and that the cost of purchase was Rs.45,000/- and also that the cost of improvement was Rs.6,25,560/- and, accordingly, the capital gain was only to the tune of Rs.17,502/- after giving the effect of indexation of cost

Dilip Mohandas Devani, Vadodara vs. Income Tax Officer, Ward-1(2)(1), Vadodara

In the result, the appeal of the assessee is partly allowed for statistical purposes, in terms of our above directions

ITA 272/AHD/2025[2012-13]Status: DisposedITAT Ahmedabad25 Aug 2025AY 2012-13

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Jigar Shah, ARFor Respondent: Shri Rajenkumar M Vasavda, Sr. DR

Section 147Section 50CSection 54

raised the following grounds of appeal: “1. Disallowance of Indexed Cost of Improvement-The CIT(A) erred in confirming the disallowance of the cost of improvement amounting to Rs. 6,00,300/-, of which the indexed cost of improvement amounted to Rs. 11,08,780/-, where the appellant’s share ... 2/5th (1/5th for himself and 1/5th for his minor daughter, whose income was clubbed with the appellant’s). The cost of improvement was paid in cash in instalments, which explains the absence of payments in the bank statement. The appellant provided sufficient evidence, including contractor bills and details of work

DCIT, Central Circle-2, Jaipur vs. Kamlaprabha L/H of Late Shri Gopal Lal Ji Goswami, Kota

In the result, the appeal of the revenue is dismissed and the Cross objection of the assessee is disposed off in terms of the observation made herein above

ITA 94/JPR/2025[2014]Status: DisposedITAT Jaipur21 Aug 2025

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Mahendra Gargieya, AdvFor Respondent: Mrs. Alka Gautam, CIT-Sr.DR a

Section 144Section 153C

Rs.4,30,51,976 on account of index cost of acquisition and Rs. 14,08,500 by making a disallowance of the index cost of improvement which relates to expenses incurred by the assessee on account of boundary wall construction. The addition so made, being completely contrary to the provisions ... Total sale consideration received Rs. 2,08,79,000 Less: A. Cost of acquisition after indexation Rs. 24,72,750 B. Indexed cost of improvement Rs. 5,90,226 Long term capital gain Rs. 1,78,16,024 Deduction u/s 54B Rs. 1,42,87,610 Net long term capital

Shri Ramchand Laxmandas Babani, Jaipur vs. Income Tax Officer, Jaipur

In the result, the appeal of the assessee is allowed

ITA 192/JPR/2025[2011-12]Status: DisposedITAT Jaipur21 Aug 2025AY 2011-12

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI, AM आयकरअपीलसं./ ITA No. 192/JPR/2025 निर्धारणवर्ष / AssessmentYear : 2011-12 Shri Ramchand Laxmandas Babani P.No.2, Shiv Shankar Colony Janta Colony, Jaipur – 302 004 (Raj) बनाम Vs. The ITO Ward -6(4) Jaipur प्रत्यर्थी / Respondent स्थायीलेखा सं. / जीआईआरसं./PAN/GIR No.: ANYPB 6571 A अपीलार्थी / Appellant निर्धारिती की ओरसे/Assesseeby : Shri Mohit Balani, Advocate (Thru" V.C.) राजस्व की ओरसे /Revenue by: Shri Gautam Sin

For Appellant: Shri Mohit Balani, Advocate (Thru” V.C.)For Respondent: Shri Gautam Singh Choudhary, JCIT-DR

Section 271(1)(c)

issue of penalty u/s 271(1)(c) of the Income tax act on the pretext of Selling of immovable property with disallowance of cost of improvement adjudicated by Ld Assessing officer and sustained by CIT(A). The aforesaid documents support the 3 ITANO. 192/JPR/2025 SHRI RAMCHAND LAXMANDAS BABANI ... that, the penalty of 22,60,090 levied under section 271(1)(c) is unjustified, as the disallowance of 1,53,549 towards cost of improvement was made solely due to the non-submission of supporting documents at the assessment stage. The Appellantnow seeks to submit additional evidence, including

Shri Alpesh Navinbhai Barot, Ahmedabad vs. The Income Tax Officer, Ward-3(3)(1), Ahmedabad

In the result, the appeal of the assessee is allowed for statistical purpose

ITA 927/AHD/2023[2015-16]Status: DisposedITAT Ahmedabad20 Aug 2025AY 2015-16

Bench: Shri T.R. Senthil Kumar & Shri Narendra Prasad Sinhaassessment Year: 2015-16

Section 139Section 143(3)Section 54Section 54F

acceptable. 9. We have considered the rival submissions. The assessee has taken an additional ground regarding deduction of cost of acquisition and cost of improvement while computing the capital gain on sale of property. From the working of capital gain, it is found that the entire sale consideration of Rs.2 ... advantage from ignorance of an assessee as to his rights. Therefore, the Assessing Officer should have enquired about the cost of acquisition and cost of improvement, if any, of the asset sold, in the course of assessment Shri Alpesh Navinbhai Barot vs ITO Page 5 of 6 proceedings

Malti Agarwal, Jaipur vs. ITO Ward-4(3), Jaipur

In the result, the appeal of the assessee is allowed

ITA 891/JPR/2025[2008-09]Status: DisposedITAT Jaipur14 Aug 2025AY 2008-09

Bench: Dr. S. Seethalakshmi & Shri Gagan Goyalmalti Agarwal, B 13B Girdhar Colony, Murlipura Thana Road, Jaipur 302 039 Pan No.: Aampa 1590K ...... Appellant Vs. Ito, Ward 4(3), Jaipur …...Respondent Appellant By : Mr. Dheeraj Borad, Ca Respondent By : Mr. Gautam Singh Choudhary, Jcit Ld. Dr Date Of Hearing : 14/08/2025 Date Of Pronouncement : 14/08/2025 O R D E R Per Gagan Goyal, A.M:

For Appellant: Mr. Dheeraj Borad, CAFor Respondent: Mr. Gautam Singh Choudhary, JCIT

Section 154Section 250Section 250(1)Section 250(4)Section 271(1)(c)Section 54F

assessee that this property was purchased by the appellant in the year 1982-83 and certain expenses were subsequently incurred for legal charges, cost of improvement etc. The assessee had also purchased two new house properties for total amount of Rs. 27, 31,935/- for claiming deduction under section

Dasa Shetty Kantha, Bangalore vs. ACIT Circle 6(3)(1), Bangalore

ITA 299/BANG/2025[2010-11]Status: DisposedITAT Bangalore14 Aug 2025AY 2010-11

Bench: Shri Waseem Ahmed & Shri Soundararajan K

For Appellant: Shri Hari Pd. Nayak, ARFor Respondent: Shri N Balusamy, JCIT

Section 2(47)(v)Section 234A

cost of acquisition of land in the year under consideration. The AO also found that assessee did not furnish any evidence suggesting cost of improvement. Hence, the AO treated the entire amount of deemed cost of construction of Rs.3,59,10,000/ as long-term capital arising from

Dasa Shetty Kantha, Bangalore vs. ACIT Circle 3(2)(1), Bangalore

ITA 1926/BANG/2024[2013-14]Status: DisposedITAT Bangalore14 Aug 2025AY 2013-14

Bench: Shri Waseem Ahmed & Shri Soundararajan K

For Appellant: Shri Hari Pd. Nayak, ARFor Respondent: Shri N Balusamy, JCIT

Section 2(47)(v)Section 234A

Hasmukhlal Ishvarlal Patel, Patan vs. Income Tax Officer, Ward 1, Patan

In the result, the appeal of the assessee in ITA No

ITA 764/AHD/2025[2020-21]Status: DisposedITAT Ahmedabad13 Aug 2025AY 2020-21

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Respondent by: Shri Prateek Sharma, Sr. DRFor Respondent: Shri Prateek Sharma, Sr. DR

Section 144Section 270A

Asst.Year –2020-21 - 3– 5. In appeal, CIT(Appeals) noted that the assessee had claimed a deduction of ₹9,51,796/- towards cost of improvement in relation to long-term capital gains as declared in the revised return of income for A.Y. 2020-21. The CIT(A) observed that ... Assessing Officer had rightly added back the amount of ₹9,51,796/- to the income of the assessee by disallowing the cost of improvement. Regarding the assessee's grievance on denial of natural justice, the CIT(A) held that adequate opportunity was provided by the AO, including multiple notices

Hasmukhlal Ishvarlal Patel, Patan vs. Income Tax Officer, Ward 1, Patan

In the result, the appeal of the assessee in ITA No

ITA 763/AHD/2025[2020-21]Status: DisposedITAT Ahmedabad13 Aug 2025AY 2020-21

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Respondent by: Shri Prateek Sharma, Sr. DRFor Respondent: Shri Prateek Sharma, Sr. DR

Section 144Section 270A

Dipa Prakashkumar Velani, Ahmedabad vs. The ITO, Ward-1(2), Bhavnagar

In the result, the appeal filed by the assessee is allowed for statistical

ITA 1039/AHD/2025[2015-16]Status: DisposedITAT Ahmedabad13 Aug 2025AY 2015-16

Bench: Dr. Brr Kumar & Shri Siddhartha Nautiyal

For Appellant: Shri Manish J Shah & Shri Rushin Patel ARSFor Respondent: Shri Prateek Sharma, Sr. DR

Section 115BSection 147Section 148Section 148ASection 156Section 69

consideration was paid out of the sale proceeds received from Mr. Rajendrasinh Chudasama, the buyer of the said plot. The assessee submitted a cost of improvement of ₹2,08,780/- was incurred and declared short term capital gains of ₹58,220/- in her return. However, the Assessing Officer rejected ... unexplained under Section 69 of the Act and taxed the same under Section 115BBE. Further, the AO disallowed the cost of improvement of ₹2,08,780/- due to lack of any documentary evidences having been furnished by the assessee, and accordingly, the Assessing Officer computed the total short-term capital

Gopal Uma Shankar, Bangalore vs. Income Tax Officer, Ward-2(1)(1), Bangalore

In the result, the Assessee’s appeal is allowed in the said terms for statistical purposes

ITA 595/BANG/2025[2016-17]Status: DisposedITAT Bangalore13 Aug 2025AY 2016-17

Bench: Shri Narender Kumar Choudhry & Shri Waseem Ahmedassessment Year: 2016-17

For Appellant: Sri Avinash Mallya, Ld. AdvocateFor Respondent: Shri Balusamy N, Ld. JCIT D.R

Section 147Section 148Section 151Section 250Section 54

failed to 2 Mr. Gopal Uma Shankar submit any evidence for the payment of Rs.2,16,97,020/- being payment on account of cost of improvement and the purchase deed of the property. 3. The Assessee, being aggrieved, challenged the said disallowances before the Ld. Commissioner, however, despite of affording

Hari Mohan, Bengaluru vs. Income Tax Officer, Ward-6(3)(1), Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 328/BANG/2025[2015]Status: DisposedITAT Bangalore13 Aug 2025

Bench: Shri Narender Kumar Chodhry & Shri Waseem Ahmedassessment Year: 2015-16

For Appellant: Shri Pranab Kishore Das, CAFor Respondent: Shri Balusamy N, JCIT (DR)

Section 147Section 148

assessment year 2015-16. 2. The only issue raised by the assessee is that the learned CIT-A erred in denying the cost of improvement of Rs. 14,50,000/- while calculating the capital gains. 3. In the present case, the assessee has claimed a cost of improvement done ... assessee preferred an appeal before the ld. CIT(A). 6. The assessee before the ld. CIT(A) reiterated the submission that the cost of improvement was incurred by the mother of the assessee in the year 2004 and, therefore, the corresponding index cost of acquisition should be allowed

Rajeshbhai Bhagwandas Patel, Vadodara vs. Income Tax Officer, Ward 5 (3) (2), Ahmedabad

In the result, the appeal of the assessee is allowed on the ground of lack of jurisdiction, and the assessment order is quashed

ITA 985/AHD/2025[2012-13]Status: DisposedITAT Ahmedabad12 Aug 2025AY 2012-13

Bench: Ms.Suchitra R. Kamble & Shri Makarand V.Mahadeokarasstt.Year : 2012-13

For Appellant: Shri Amit Pratap Singh, Sr.DR

Section 142(1)Section 144Section 147Section 148Section 250Section 50C

proceeded to determine the long-term capital gain on the entire jantri value of Rs.10,04,081/-, treating the cost of acquisition and cost of improvement as nil, and thus added the entire amount as long-term capital gain under the head “capital gains”. The AO also recorded satisfaction ... full value of consideration, further computing the entire amount as long-term capital gain under section 48 by taking cost of acquisition and cost of improvement as nil, since no evidence had been furnished by the assessee during the assessment proceedings. The reassessment was accordingly framed under section 144 r.w.s

Gautam Chand Jain (HUF), Secunderabad vs. DCIT., Circle - 6(1), Hyderabad

In the result, appeal of the assessee is dismissed

ITA 409/HYD/2025[2020-21]Status: DisposedITAT Hyderabad08 Aug 2025AY 2020-21

Bench: Shri Vijay Pal Rao & Shri Madhusudan Sawdiaआ.अपी.सं /Ita No.409/Hyd/2025 (निर्धारण वर्ा/Assessment Year: 2020-21) Gautam Chand Jain(Huf) Vs. Deputy Commissioner Secunderabad Of Income Tax Pan : Aabhg7699J Circle-6(1) Hyderabad (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee By: Shri K.Sai Prasad, Ar रधजस् व द्वधरध/Revenue By: Shri Narender Kumar Naik, Cit-Dr सुिवधई की तधरीख/Date Of Hearing: 17/07/2025 घोर्णध की तधरीख/ 08/08/2025 Date Of Pronouncement: आदेश / Order

For Appellant: Shri K.Sai Prasad, ARFor Respondent: Shri Narender Kumar Naik

Section 142(1)Section 143(3)Section 2(47)Section 263

situs of the asset, whether within prescribed municipal limit, documentary evidence in respect of purchase cost of the asset transferred, documentary evidence of cost of improvement, documentary evidence of sale consideration received from transfer of the asset, detailed calculation of the capital gain etc. The assessee duly replied ... under : 8. The AO has asked certain details from the assessee regarding the assets transferred during the year, documentary evidence of purchase cost and improvement cost as well as sale consideration received, calculation of the fair market value of the asset transferred, details of calculation of capital gain etc. Thus

Koma Singhal, Dehradun vs. DCIT/ACIT Cen Cir, Dehradun

In the result, Appeal of the Assessee is allowed

ITA 59/DDN/2025[2021-22]Status: DisposedITAT Dehradun06 Aug 2025AY 2021-22

Bench: Shri S. Rifaur Rahman & Shri Yogesh Kumar U.S.

Section 133(6)Section 143(3)

supporting documents. On perusal of the same, it was observed by the A.O. that, the assessee had claimed Rs. 5,00,000/- towards cost of improvement of the capital asset sold and which on indexation worked out to Rs. 7,52,500/-. Accordingly, the assessee was required to substantiate ... aforesaid indexed cost of improvement with appropriate bills/vouchers. However, the assessee could not furnish the same in due time. The A.O. observed that the Assessee had failed to corroborate the aforesaid indexed cost to improvement of Rs. 7,52,500/- claimed on the sale of aforesaid capital asset, with appropriate

Mrs. Surekha L/R of Late Shri. Devaraj, Bangalore vs. Income Tax Officer, Ward-7(2)(5), Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 910/BANG/2025[2015-16]Status: DisposedITAT Bangalore05 Aug 2025AY 2015-16

Bench: Shri Waseem Ahmed & Shri Soundararajan K.Assessment Year : 2015-16

For Respondent: Shri B.S. Balachandran

Section 144Section 144BSection 147Section 148Section 148ASection 234ASection 269SSection 271(1)(c)Section 271D

reinvested by the Appellant and hence, there was no taxable capital gains. 10. The CIT(A) and AO erred in not considering the cost of improvement incurred by the Appellant while computing the capital gains. 11. The CIT(A) and AO erred in initiating proceedings under section 271D

Indur Thanwerdas Dadlani, Mumbai vs. The Principal Commissioner of Income Tax PCIT, Mumbai-42, Mumbai

In the result, the appeal filed by the assessee stands allowed without any order as to cost

ITA 2476/MUM/2025[2020-21]Status: DisposedITAT Mumbai04 Aug 2025AY 2020-21

Bench: Hon’Ble Shri Sandeep Gosain & Shri Prabhash Shankarindur Thanwerdas Dadlani Vs. Pr. Cit Flat No. 4604, The Imperial Mumbai – 42 Towers, Mp Mill Compound, Room No. 741, Aayakar Bb Nakashe Marg, Mardeo, Bhavan, Mk Road, Mumbai – 400034. Mumbai Pan/Gir No. Aacpd5262D (Applicant) (Respondent)

Section 142(1)Section 143(2)Section 263Section 57Section 74

relevant to the A.Y 2020-21 6. Documentary evidence in respect of purchase cost of Capital asset. 7. Documentary evidence of cost of improvement, if any. 8. Documentary evidence of sale consideration received from sale of Capital asset. 9. Fair market value of capital asset ... above, the purchase agreement of flat at Mazda Apartment dated 28.08.1981 which is at paper book page Nos. 73 to 100. Details of cost of improvement being repairs and renovation of Rs. 6,12,130/- which is at paper book page No. 102, Documentary evidence being 17 Indur Thanwerdas Dadlani