“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

Urmila Rajendra Mundra, Ajmer vs. Income Tax Officer, Ward-2(2), Ajmer

In the result grounds raised by the assessee is allowed

ITA 577/JPR/2025[2022-23]Status: DisposedITAT Jaipur01 Aug 2025AY 2022-23

Bench: SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member), SHRI NARINDER KUMAR (Judicial Member)

For Appellant: Sh. Sunil Porwal, CAFor Respondent: Sh. Gautam Singh Choudhary, JCIT

Section 250Section 270ASection 270A(1)

Succinctly, the fact as culled out from the records is that in the quantum proceeding the claim of cost of improvement of Rs. 4,19,720/- being the interest capitalized by the assessee was disallowed. Against that disallowance for claim of cost of expenditure the assessee did not prefer ... that the addition made by the AO did not come in the category of misreporting of income. In this case, the appellant claimed cost of improvement on account of capitalised interest and increased cost of acquisition resulting into accepting less liability for income tax but failed to substantiate

Gomathy Jalaja, Trivandrum vs. DCIT, Central Circle, Thiruvananthapuram

In the result, the appeals filed by the assessee stand dismissed

ITA 780/COCH/2024[2007-08]Status: DisposedITAT Cochin31 Jul 2025AY 2007-08

Bench: Shri Inturi Rama Rao, Am & Shri Sonjoy Sarma, Jm

For Appellant: Ms. Anoopa M.J., AdvocateFor Respondent: Smt. Leena Lal, Sr. D.R

Section 132Section 142(1)Section 143(3)Section 144Section 153Section 153C

against Rs. 35,00,000/- disclosed during the course of sworn in statement recorded from the assessee and also not granted cost of improvement of Rs. 14,50,000/- as the appellant had failed to cost of improvement of Rs. 14,50,000/-. 17. Being aggrieved, an appeal was filed

Gomathy Jalaja, Trivandrum vs. DCIT, Central Circle, Thituvananthapuram

In the result, the appeals filed by the assessee stand dismissed

ITA 779/COCH/2024[2005-06]Status: DisposedITAT Cochin31 Jul 2025AY 2005-06

Bench: Shri Inturi Rama Rao, Am & Shri Sonjoy Sarma, Jm

For Appellant: Ms. Anoopa M.J., AdvocateFor Respondent: Smt. Leena Lal, Sr. D.R

Section 132Section 142(1)Section 143(3)Section 144Section 153Section 153C

Gomathy Jalaja, Trivandrum vs. DCIT, Central Circle, Thiruvananthapuram

In the result, the appeals filed by the assessee stand dismissed

ITA 778/COCH/2024[2004-05]Status: DisposedITAT Cochin31 Jul 2025AY 2004-05

Bench: Shri Inturi Rama Rao, Am & Shri Sonjoy Sarma, Jm

For Appellant: Ms. Anoopa M.J., AdvocateFor Respondent: Smt. Leena Lal, Sr. D.R

Section 132Section 142(1)Section 143(3)Section 144Section 153Section 153C

Remya Vikraman Nair Rema Devi, Trivandrum vs. ITO, Ward 1(1), Trivandrum

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

ITA 701/COCH/2024[2016-17]Status: DisposedITAT Cochin31 Jul 2025AY 2016-17

Bench: Shri Inturi Rama Rao, Am & Shri Sonjoy Sarma, Jm Assessment Year: 2016-17 Remya Vikraman Nair Rema Devi .......... Appellant 79 2290, Mudumbil Puthenveedu Karikkakom, Thiruvananthapuram 695007 [Pan: Cdmpr5619H] Vs. Ito, Ward-1(1), Thiruvananthapuram .......... Respondent Appellant By: ------- None ------- Respondent By: Smt. Leena Lal, Sr. D.R. Date Of Hearing: 10.06.2025 Date Of Pronouncement: 31.07.2025

For Appellant: ------- None -------For Respondent: Smt. Leena Lal, Sr. D.R

Section 139(1)Section 147Section 148Section 55(2)

assessed the entire sale consideration received on sale of immovable property as reduced by the income returned without allowing cost of improvement claimed of Rs. 14,50,000/- and cost of acquisition and fair market value as on 01.06.2016 of Rs. 16,00,000/- for the failure of the assessee ... market value of the property as on 01.04.2000 was Rs. 2,00,00/- per cent. Similarly, the AO also denied the benefit of cost of improvement of Rs. 14,50,000/- claimed to have been incurred on land leveling – Rs. 3,50,000/-, construction of compound wall

Badam Singh, Bhopal vs. ITO 4(1), Bhopal

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

ITA 127/IND/2025[2013-2014]Status: DisposedITAT Indore31 Jul 2025AY 2013-2014

Bench: B.M. Biyani & Shri Paresh M Joshibadam Singh, Income Tax Officer- बनाम/ 392 Gram Palasi, 4(1), Vs. New Jail Road, Bhopal Karond, Bhopal (Pan: Drhps5664B) (Appellant) (Revenue) Assessee By Shri S.S. Solanki, Ars Revenue By Shri Ashish Porwal, Dr Date Of Hearing 31.07.2025 Date Of Pronouncement 31.07.2025 आदेश / O R D E R

Section 143Section 246ASection 250Section 253Section 282

impugned order. It is seen that the assessee failed to produce documentary evidence with respect to the claim of cost of acquisition, cost of improvement, costs involved in the transfer of assets and the fact that the assessee produced only estimates of cost of construction in support of his claim ... consideration shown in documents of transfer of land. Ground 7. That in the facts and circumstances of the case no cost of acquisition, cost of improvement and expenses relating to transfer of land has been considered which is bad in law and erroneous. Ground 8 That in the facts

Ramakrishna Saroja, Bangalore vs. ACIT, Circle-2(2)(1), Bengaluru

In the result, appeal filed by the assessee is dismissed

ITA 66/BANG/2025[2017-18]Status: DisposedITAT Bangalore31 Jul 2025AY 2017-18

Bench: Shri Laxmi Prasad Sahu & Shri Soundararajan Kassessment Year : 2017-18 Smt. Ramakrishna Saroja, Vs. Acit, No.807, 4Th Cross, 8Th Main Ii Block, Circle – 2(2)(1), Banashankari, Bangalore. Bangalore – 560 050. Pan : Avups 0511 K Appellant Respondent Assessee By : Shri. N. Vijaya Kumar, Ca Revenue By : Shri. Ashwin D Gowda, Addl.Cit(Dr)(Itat), Bangalore. Date Of Hearing : 29.07.2025 Date Of Pronouncement : 31.07.2025

For Appellant: Shri. N. Vijaya Kumar, CAFor Respondent: Shri. Ashwin D Gowda, Addl.CIT(DR)(ITAT), Bangalore

Section 139(1)Section 143(2)Section 234BSection 54

without jurisdiction. 3. For that the Commissioner of Income Tax (Appeals) erred in upholding the disallowance of Rs.36,58,422/- being indexed cost of improvements incurred for the property. 4. For that the Commissioner of Income Tax (Appeals) has failed to appreciate the fact that the building improvements were made ... assessee filed detailed written submissions. The learned CIT(A) accepted the claim of deduction under section 54 of the Act but cost of improvement could not be established by the assessee with supporting evidence towards incurring of expenditure and he submitted that the expenditures were incurred 30 years back

Sneha Pandey, Etawah vs. Income Tax Officer 2(2)(5) Etawah, Etawah

In the result, the appeal is allowed for statistical purposes

ITA 138/AGR/2025[2020-21]Status: DisposedITAT Agra30 Jul 2025AY 2020-21

Bench: : Shri Sunil Kumar Singh & Shri Brajesh Kumar Singh

Section 143(3)Section 250Section 250(6)

declared sale consideration thereof amounting to Rs.29,00,000/- and the addition of Rs.11,57,000/- on account of disallowance of indexed cost of improvement as LTCG, made by the Assessing Officer vide assessment order dated 23.09.2022 passed u/s. 143(3) r.w.s. 144B of the Act. 2. At the very

The Dy. Commr. of Income Tax, Cir.-1(1), Rajkot-Gujarat vs. Smt. Krushnaba P. Jadeja, Rajkot-Gujarat

ITA 577/RJT/2015[2012-13]Status: DisposedITAT Rajkot30 Jul 2025AY 2012-13

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinha

For Appellant: Shri D.M. Rindani, Ld. ARFor Respondent: Shri Sanjay Punglia, Ld. CIT-DR

Section 142(1)Section 143(2)Section 143(3)Section 68

land ad measuring 3976.38, consisted of aforesaid 38 plots, the assessee has claimed to have incurred cost of acquisition, cost of improvement and other related expenses aggregating Rs.2,34,03,439/-, as summarized by Assessing Offier on Page No. 17 of the assessment order. 31. Considering these facts, during ... that during the assessment proceedings, it was noticed by Assessing Officer that the assessee has claimed a sum aggregating Rs.79 95,500/-, towards cost of improvement of the said land ad measuring 7339.74. Accordingly, average expenses incurred on this count comes to Rs.1090/-, per Square Yard. These expenses are claimed

Smt. Krushnaba Pravinsinh Jadeja, Rajkot-Gujarat vs. The Dy. Commr. of Income Tax, Cir.-1(1), Rajkot-Gujarat

ITA 572/RJT/2015[2012-13]Status: DisposedITAT Rajkot30 Jul 2025AY 2012-13

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinhaआयकर अपील सं./Ita No.572/Rjt/2015 (निर्धारण वर्ष / Assessment Year: 2012-13) Krushnaba Pravinsinh Jadeja Vs. Deputy Commissioner Of Income Tax, Circle-1(1), Rajkot, Aaykar Bhavan, Race Course Ring Road, Rajkot-360 001 C.O. R.K. Shukla & Co., 201, 2Nd Floor, Opera Tower, Jawahar Road, Rajkot-360 001 (Assessee) (Respondent) आयकर अपील सं./Ita No.577/Rjt/2015 (निर्धारण वर्ष / Assessment Year: 2012-13) Deputy Commissioner Of Income Tax, Circle-1(1), Rajkot, Aaykar Bhavan, Race Vs. Krushnaba Pravinsinh Jadeja, C.O. R.K. Shukla & Co., Course Ring Road, Rajkot-360 001 201, 2Nd Floor, Opera Tower, Jawahar Road, Rajkot-360001 (Assessee) (Respondent) Assessee By Respondent By Date Of Hearing Date Of Pronouncement : Shri D.M. Rindani, Ld. Ar : Shri Sanjay Punglia, Ld. Cit-Dr : 03/06/2025 : 30/07/2025 Per, Dr. A. L. Saini, Am: आदेश / Order Captioned Cross Appeals Filed By The Assessee & Revenue, Pertaining To Assessment Year (A.Y.) 2012-13, Are Directed Against The Common Order Passed By The Learned Commissioner Of Income Tax (Appeals)-1 Rajkot, Which In Turn Arise, Out Of A Common Assessment Order, Passed By The Assessing Officer, Under Section 143(3) Of The Income Tax Act, 1961, Vide Order Dated 17.02.2015.

Section 142(1)Section 143(2)Section 143(3)Section 68

Anil Kumar, Etah vs. Income-Tax Officer, Ward-4(3)(1), Etah

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

ITA 262/AGR/2025[2012-2013]Status: DisposedITAT Agra29 Jul 2025AY 2012-2013

Bench: Shri Sunil Kumar Singh & Shri Brajesh Kumar Singh[Assessment Year: 2012-13]

Section 143(3)Section 147Section 234A

appellant. 9. That the learned Commissioner of Income-tax (NFAC) has erred in law and on facts in disallowing the claim of cost of improvement, without considering the fact that the expenditure was duly incurred by the appellant and had also been accepted by the learned Assessing Officer, hence such ... Officer allowed a sum of Rs.4,22,769/- and disallowed the balance amount of Rs.3,62,231/-. Further, the assessee had claimed indexed cost of improvement of Rs.16,53,975//-, which was disallowed in entirety by the AO. 4. Against the above order, the assessee filed an appeal before

Rehana Parveen, Mangalore vs. Income Tax Officer, Ward 6(3)(1), Bangalore

In the result, appeal of the assesseeis allowed

ITA 38/BANG/2025[2015-16]Status: DisposedITAT Bangalore29 Jul 2025AY 2015-16

Bench: Shri. Laxmi Prasad Sahu & Shri. Soundararajan Kassessment Year : 2015-16

For Appellant: Shri. Balram R Rao, AdvocateFor Respondent: Shri. Ganesh R. Ghale, Advocate, Standing Counsel for Revenue

Section 148Section 148ASection 149

circumstances of the case, the learned CIT(A) erred in upholding the disallowance of claim for deduction on account of cost of improvement amounting to Rs. 42,16,650. 4. On the facts and in the circumstances of the case, the learned CIT(A) failed to appreciate that the income ... respectively which were accepted. From the computation of capital gain, it was observed that the assessee has deducted Rs.42,16,650/- as cost of improvement for computing capital gains / losses. However, the assessee could not Page 3 of 5 furnish any evidence in support of its cost of improvements claimed

Prakash Bare, Bengaluru vs. DCIT Circle 2(2)(1), Koramangala, Bengaluru

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

ITA 1030/BANG/2025[2022-23]Status: DisposedITAT Bangalore29 Jul 2025AY 2022-23

Bench: Shri. Laxmi Prasad Sahu & Shri. Soundararajan Kassessment Year :2020-21

For Appellant: Shri. B. N. Pattabhi, CAFor Respondent: Shri. R. Rajamanohar, JCIT(DR)(ITAT), Bangalore

Officer erred in law and on facts in not considering the Indexed Cost of Acquisition of Rs 2,20,33,,317/- and Indexed Cost of Improvement of Rs 60,66,315/- . Further, Learned Commissioner of Income Tax (Appeals) National Faceless Appeal Centre, Delhi has failed to appreciate the fact that ... 06/12/2022 respectively. It is earnestly requested and Prayed that the Indexed Cost of Acquisition of Rs 2,20,33,317/- and Indexed Cost of Improvement of Rs 60,66,315/- be allowed as deductions from the sale consideration of Rs 3,72,50,000/- and Long Term Capital Gains

Rajesh Vrajlal Dhanki, Mumbai vs. Assistant Commissioner of Income Tax -Central Circle 33(3), Mumbai

In the result, grounds of appeal of assessee are partly allowed

ITA 3565/MUM/2024[2014-15]Status: DisposedITAT Mumbai28 Jul 2025AY 2014-15

Bench: Shri Pawan Singh & Ms. Padmavathy S(Physical Hearing) Rajesh Vrajlal Dhanki Acit, Central Circle –33(3), 122, 1St Floor, Commerce House, Vs 607, C-12,Prathyaksha Kar Bhawan, Dr. V. B. Gandhi Road Fort, Bkc, Bandra(E), Kala Ghoda, Mumbai-400001. Mumbai-51 [Pan: Aaapd8581D] Appellant / Assessee Respondent / Revenue

Section 2(14)Section 254(1)

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 ... 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 5. That the Id. A.O and Ld. CIT (Appeals) has erred in not excluding the furniture

Bharat Amratlal Shah, Mumbai vs. DCIT-Circle 4(1)(1), Aayakar Bhawan

ITA 134/MUM/2025[2018-19]Status: DisposedITAT Mumbai25 Jul 2025AY 2018-19

Bench: Shri Narender Kumar Choudhry (Jm) & Shri Omkareshwar Chidara (Am) Bharat Amratlal Shah Dcit, Circle 4(1)(1) I-E, Wing B, 1St Floor Aayakar Bhavan Kakad House, 11-New Vs. M.K. Road Marine Lines, Opp. Churchgage Bombay Hospital Mumbai-400 020. Mumbai-400 020. Pan : Appellant Respondent

For Appellant: Shri Leyaqat Ali AafaquiFor Respondent: None

Section 143(3)Section 250Section 270ASection 49Section 54ESection 55Section 55(2)(a)

purchased any tenancy rights from previous owner. Section 55(2)(a) of the I.T. Act is reproduced below :- Section 55 - Meaning of “adjusted", "cost of improvement" and "cost of acquisition” Section 55 (2)(a) For the purposes of sections 48 and 49," cost of acquisition" (a) in relation

Kamlesh Khanna, New Delhi vs. ACIT, Circle-40(1), New Delhi

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

ITA 7841/DEL/2019[2015-16]Status: DisposedITAT Delhi24 Jul 2025AY 2015-16

Bench: Shri Anubhav Sharma & Shri Amitabh Shukla

For Appellant: Sh. Salil Kapoor, Adv &For Respondent: Ms. Harpreet Kaur Hansra, Sr. DR

Section 143(1)Section 143(3)Section 54

upholding the computation of Long Term Capital Gain ('LTCG') done by the AO at Rs. 2,11,68,800/- disallowing indexed cost of improvement incurred by the Assessee-Appellant on the property. 5. That, without prejudice to the aforementioned contention, the AO as well as the CIT(Appeals) have erred ... considering the cost of improvement amounting to Rs. 74,74,524/- (Rs. 43,25,517/-, 27,28,791/- and 4,20,216/- for Financial Year 1983-84, 1990-91 and 2003-04) incurred by the Assessee while computing Long Term Capital Gain ('LTCG'), whereas the same had to be reduced

Jai Ambay Minerals, Ajmer vs. ITO Ward 2(1), Ajmer

ITA 1296/JPR/2024[2016-17]Status: DisposedITAT Jaipur23 Jul 2025AY 2016-17

Bench: This Appellate Tribunal, Feeling Dissatisfied With The Order Dated 26.08.2024, Passed By Learned Cit(A), National Faceless Appeal Centre, Delhi, As Thereby Its Appeal Filed Against Assessment Order Dated 25.01.2024 , Passed U/S 147 R.W.S. 144 Of The Income Tax Act, 1961 (Hereinafter Referred To As “The Act”), Has Been Dismissed & The Assessment Order Has Been Confirmed.

For Appellant: Shri Nikhelesh Kataria, C.AFor Respondent: Mrs. Anita Rinesh, JCIT, Sr. DR

Section 143(1)(a)Section 144Section 147Section 148Section 3

Income as computed u/s 143(1)(a) N.A. 3. Add: Long Term Capital Gain by disallowing Rs. 46,52,487/- indexed cost of improvement of Rs. 37,77,826/- as discussed supra 4. Add: disallowance of short term capital loss as Rs. 6,23,900/- discussed supra 5. Add: Income

Sonea Dhir, Delhi vs. ACIT Circle-32 (1), New Delhi

Appeal of the assessee is allowed

ITA 3073/DEL/2024[2011-12]Status: DisposedITAT Delhi23 Jul 2025AY 2011-12

Bench: Shri Anubhav Sharma & Shri Manish Agarwal

Section 143(1)Section 143(2)Section 147Section 250Section 50C

assessee sold a number of properties for Rs. 22.89,80,475/- and claimed cost of acquisition of Rs. 22,43,80,400/- and cost of improvement of Rs 22,44,216/- thereby resulting into short term capital gain of Rs. 23,55.859/-However sale deeds of properties, evidence of cost

Marath Velayudhan Joshy, Trichur vs. ITO, Ward 1(1), Thrissur

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

ITA 395/COCH/2025[2015-16]Status: DisposedITAT Cochin22 Jul 2025AY 2015-16

Bench: Shri Inturi Rama Rao & Shri Sonjoy Sarma

Section 148

assessee had sold a property comprising landpurchased for 40,000 and a house constructed thereon for Rs.28,68,800/-. Theassessee claimed indexed cost of improvement amounting to Rs.46,48,182/-.However, the Assessing Officer disallowed the said cost of improvement onthe grounds that the assessee failed to produce adequate documentaryevidence ... However, the appeal was dismissed primarily on the ground thatthe assessee failed to furnish necessary supporting evidence during theappellate proceedings, particularly regarding the cost of improvement and thesource of funds. 5. Before the Tribunal, the assessee submitted that certain additionalevidences are now available, which could substantiate the cost ofimprovement claimed

Avinash Dattatray Muley, Pune vs. PCIT, Pune

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

ITA 624/PUN/2025[2020-21]Status: DisposedITAT Pune22 Jul 2025AY 2020-21

Bench: Shri R. K. Panda & Ms Astha Chandraassessment Year : 2020-21

For Appellant: Shri Sarang GudhateFor Respondent: Shri Amol Khairnar, CIT-DR

Section 143(2)Section 143(3)Section 263Section 48Section 54B

From the working of long term capital gain he noted that the assessee has claimed deduction u/s 48 of the Act on ‘cost of improvement’ on the said land amounting to Rs.1,88,85,580/- (after indexation). The said ‘cost of improvement’ has been claimed for financial years ... However, no supporting evidence or document in respect of these expenses incurred on the ‘cost of improvement’ was submitted by the assessee during the course of assessment proceedings. He noted that the Assessing Officer, while passing the assessment order, has allowed these expenses as deduction