“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

Shahjad Qureshi, Jaipur vs. Income Tax Officer, Jaipur

ITA 403/JPR/2025[2010-11]Status: DisposedITAT Jaipur23 Jun 2025AY 2010-11

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

For Appellant: Shri Gaurav Sharma, AdvocateFor Respondent: Shri Gautam Singh Choudhary, Addl. CIT-DR

Date of Acquisition : 12-01-2006 (Copy of the purchase agreement and power of attorney is attached for your reference) Rs.1051000 * 497 Less: cost of improvement Nil Long Term capital Gain/Loss Rs. – 36,483/- Less: Exempted u/s 54 From the above calculation we can understand that there is Long Term

Sh. Harwant Singh Grewal, Ludhiana vs. ITO, Ward-7(4), Ludhiana

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

ITA 594/CHANDI/2022[2013-14]Status: DisposedITAT Chandigarh23 Jun 2025AY 2013-14

Bench: Shri Rajpal Yadav & Shri Krinwant Sahayआयकर अपील सं./ Ita No. 594/Chd/2022 "नधा"रण वष" / Assessment Year: 2013-14 Shri Harwant Singh Grewal, The Ito, B-Xxxiv, # 8913, Durga Puri, Vs Ward 7(4), Haibowal Kalan, Ludhiana. Ludhiana. "थायी लेखा सं./Pan No: Adcpg7982Q अपीलाथ"/Appellant ""यथ"/Respondent Assessee By : Shri Sudhir Sehgal, Advocate Revenue By : Shri Vivek Vardhan, Addl.Cit, Sr.Dr Date Of Hearing : 08.05.2025 Date Of Pronouncement : 23.06.2025 Physical Hearing O R D E R

For Appellant: Shri Sudhir Sehgal, AdvocateFor Respondent: Shri Vivek Vardhan, Addl.CIT, Sr.DR

Section 139(1)Section 143(2)Section 2(14)Section 234ASection 54BSection 54F

following amounts, namely; a) Expenditure incurred wholly and exclusively in connection with such transfer, b) The cost of acquisition of the asset and cost of improvement thereto A.Y.2013-14 5 6.1 It is also pertinent to note that Section 50C would come into play which contemplates that where the consideration received

Braj Kishore Singh, Andheri East vs. Assessing Officer Int. Tax Ward 4(2)(1), International Tax, Mumbai

In the result, the appeal is accordingly partly allowed for statistical

ITA 1011/MUM/2025[2015-16]Status: DisposedITAT Mumbai23 Jun 2025AY 2015-16

Bench: Ms. Padmavathy S & Shri Raj Kumar Chauhanbraj Kishore Singh Vs. Assessing Officer 604, Lantana, Nahar Amrit Internatinal Tax Ward Shakti, Chandivali, 4(2)91) Maharashtra -400 072. Room No. 632, Kautilya Bhavan, Pan: Bqips8474H C-41 To C-43, G Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051

Section 142(1)Section 144C(1)Section 144C(2)Section 144C(5)Section 147Section 148Section 271(1)(c)Section 274

seen is, out of full value of the consideration received or accruing, the cost of acquisition of the asset, the cost of improvement and any expenditure wholly or exclusively incurred in connection with such transfer is to be deducted. What remains thereafter is the capital gain. Braj Kishore Singh

Dattatraya Pimple Through Legal Heir Sachin Pimple, Amravati vs. ITO Ward-5, Amravati

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

ITA 98/NAG/2025[2014-15]Status: DisposedITAT Nagpur19 Jun 2025AY 2014-15

Bench: Shri Narender Kumar Choudhry

For Appellant: Shri Mahavir AtalFor Respondent: Shri Anand Nagrale

Deceased) Through Legal Heir Shri Sachin Pimple allowed the index cost of acquisition for an amount of ` 8,38,393/– however, disallowed indexed cost of improvement claimed by the assessee at ` 25,04,000/– by holding that in the absence of any supporting documents / evidence, indexed cost of improvement claimed ... absence of relevant document/evidence, which the assessee admittedly failed to furnish, affirmed the aforesaid decision of the Assessing Officer in rejecting the indexed cost of improvement. 3. Heard both the parties and perused the material available on record and given thoughtful consideration to the peculiar facts and circumstances

Raj Kumar, Vpo Jaroda vs. ITO Ward-3, New Delhi

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

ITA 3945/DEL/2023[2008-09]Status: DisposedITAT Chandigarh19 Jun 2025AY 2008-09

Bench: Shri Rajpal Yadav & Shri Krinwant Sahay

For Appellant: Shri Sudhir Sehgal, AdvocateFor Respondent: Dr. Ranjit Kaur, Addl. CIT Sr.DR

Section 144Section 147

Income tax act without establishing the facts that the assessee has taxable capital gain in his hand after exemption and deduction of cost of improvement. 3945-Del-2023– Raj Kumar, Yamunanagar 3  That the Ld. AA has no jurisdiction over the applicant and the order passed is without jurisdiction

Shanmughasundharamramanathan, Chennai vs. ITO, Ncw-10(6), Chennai

ITA 888/CHNY/2025[2017-18]Status: DisposedITAT Chennai18 Jun 2025AY 2017-18

Bench: Shri Aby T. Varkey & Shri Jagadishआयकर अपील सं./Ita No.888/Chny/2025 िनधा8रण वष8 /Assessment Year: 2017-18 Shanmughasundharam The Income Tax Officer, Ramanathan, Vs. Non Corporate Ward-10(6), No.45, Theosophical Society, Chennai. Adyar, Chennai – 600 020. [Pan: Aafps 6078P]

For Appellant: Shri G. Akash, Advocate

Section 143(3)Section 234ASection 234CSection 234D

indexed cost of acquisition as on 1990-91 as against 1980-81 taken by the assessee. The A.O has also disallowed the cost of improvement to the extent of 20% of the claimed amount of Rs.93,75,000/- and commission expenses related to the transfer of property to the extent ... cost by adopting the base year as 1981-82. However, the assessee has filed present appeal challenging the disallowance 20% of the claimed cost of improvement amounting to Rs. 18,75,000/- and the disallowance of commission expenses of Rs. 2,00,000/-. 4. The Ld. Authorized Representative

Raj Kumar, New Delhi vs. ITO, Ward-58(4), Delhi

In the result, the appeal of the assessee is allowed

ITA 3092/DEL/2024[2017-18]Status: DisposedITAT Delhi11 Jun 2025AY 2017-18

Bench: Shri Satbeer Singh Godara & Shri Amitabh Shukla

For Appellant: Shri Sandeep Sapra, Advocate

Section 143(3)Section 46ASection 48Section 54

production of bills and vouchers qua expenses cannot deny the claim. The issue seminal to the controversy is that the assessee is claiming cost of improvement of the property which has contributed to enhanced indexed cost of acquisition. Though the onus to establish a claim of its expenditure primarily rest

ACIT, New Delhi vs. Phoola Rani Chadha, New Delhi

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

ITA 3480/DEL/2024[2017-18]Status: DisposedITAT Delhi06 Jun 2025AY 2017-18

Bench: Ms. Madhumita Roy & Shri Khettra Mohan Royphoola Rani Chadha Vs. Acit, Circle 30(1) Plot No. 23, Civic Centre, Road No. D-4 Dlf, Minto Road Phase-1, Dlf City New Delhi – 110002 Gurgaon, Haryana 122002 "थायीलेखासं./जीआइआरसं./Pan/Gir No: Aaapc1676L Appellant .. Respondent Acit, Vs. Phoola Rani Chadha Room No. 1001, 10Th C-51, Defence Colony Floor, E-2, Block, New Delhi – 110024 Civic Centre, Minto Road Delhi – 110002 "थायीलेखासं./जीआइआरसं./Pan/Gir No: Aaapc1676L Appellant .. Respondent

For Appellant: Sh. Ravi Bhatia, CAFor Respondent: Ms. Monika Singh, CIT, DR

Section 143(3)

evidences of sales and purchase deed deduction under Section 48 of Rs.127, 23,329/- towards cost of acquisition and Rs.13,08,880/- towards cost of improvement was disallowed. The Ld. CIT(A) has recalculated the capital gain by holding as follows: “5.1 Regarding Flat No. C at DCM Building Plot ... adequate relief afforded to the Appellant who is super Citizen Women.” 8. The assessee has failed to submit any evidence regarding cost of improvement considering that the flat has been acquired in 1988-89 there is no evidence regarding the cost of improvement. The prayer of appellant is not established

Phoola Rani Chadha, New Delhi vs. Assistant Commissioner of Income Tax Circle 30(1), New Delhi

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

ITA 3469/DEL/2024[2017-18]Status: DisposedITAT Delhi06 Jun 2025AY 2017-18

For Appellant: Sh. Ravi Bhatia, CAFor Respondent: Ms. Monika Singh, CIT, DR

Section 143(3)

Acquire Infrastructure Private Limited, New Delhi vs. Deputy Director of Income Tax, CPC, Bengaluru

Appeal is allowed for statistical purposes

ITA 2385/DEL/2025[2023-24]Status: DisposedITAT Delhi05 Jun 2025AY 2023-24

Bench: SHRI SATBEER SINGH GODARA (Judicial Member)

Section 143(1)

emerges during the course of hearing at the outset that both the learned lower authorities have disallowed the assessee’s claim of cost of improvement for the purpose of computing index cost of the capital asset amounting to Rs.30,28,412/-; in the CPC’s 143(1) processing dated

Sh. Rajinder Singh Bedi, Chandigarh vs. DCIT (Intl. Taxation), Chandigarh

In the result, appeal of the assessee is allowed

ITA 538/CHANDI/2022[2018-19]Status: DisposedITAT Chandigarh04 Jun 2025AY 2018-19

Bench: Shri Rajpal Yadav & Shri Manoj Kumar Aggarwalआयकर अपील सं./ Ita No. 538/Chd/2022 "नधा"रण वष" / Assessment Year: 2018-19 Shri Rajinder Singh Bedi, The Dcit, (Int.Taxation ), 1368, Sector 40-B, Vs Chandigarh. Chandigarh. "थायी लेखा सं./Pan No: Afwpb3355A अपीलाथ"/Appellant ""यथ"/Respondent Assessee By : Shri Sudhir Sehgal, Advocate Revenue By : Smt. Kusum Bansal, Cit, Dr Date Of Hearing : 09.04.2025 Date Of Pronouncement : 04.06.2025 Hybrid Hearing O R D E R

For Appellant: Shri Sudhir Sehgal, AdvocateFor Respondent: Smt. Kusum Bansal, CIT, DR

Section 143(2)Section 143(3)Section 144Section 144CSection 144C(13)Section 144C(2)(b)Section 144C(5)

requesting him to produce documentary evidence to substantiate his claims. The assessee has failed to produce any proof/evidence to substantiate his claims for cost of improvement & expenses. Further the counsel of the assessee has expressed his inability in producing various documents/ proof of expenditure of the property in question ... plea of the property being ancestral and bills/bank statements being very old. (iii) Hence the indexed cost of improvement of Rs.27,11,0001- and expenses of Rs.19,40,000/-claimed by the assessee are hereby disallowed. However, on the ground of natural justice, the cost of construction for covered area

Anand Swarup Mehta, Mumbai vs. Income Tax Officer(International Tax)-3(2)(1), Mumbai

In the result, the appeal is accordingly allowed for statistical purposes

ITA 851/MUM/2025[2022-23]Status: DisposedITAT Mumbai04 Jun 2025AY 2022-23

Bench: Ms. Padmavathy S & Shri Raj Kumar Chauhan

Section 111ASection 142(1)Section 143(2)Section 144C(5)

Krishna Kishore Reddy Manyam, Hyderabad vs. Income Tax Officer, Ward-6(4), Hyderabad

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

ITA 58/HYD/2020[2008-09]Status: DisposedITAT Hyderabad02 Jun 2025AY 2008-09

Section 143(2)Section 143(3)Section 2(14)Section 548Section 54BSection 54F

Rs.1,01,07,115/- (Rs.71,56,960/- + Rs. 29,50,155/-). 10. Apropos the assessee's claim for deduction of the cost of improvement of Rs.39,20,100/- and Rs.15,80,000/-, the CIT(A) observed that in the absence of any documentary evidence to substantiate the aforesaid claim ... submitted that both the authorities below have without any justification scrapped the assessee's claim for deduction of the indexed cost of improvement amounting to Rs.82,50,632/-. 17. Per contra, Dr. Sachin Kumar, the learned Senior Departmental Representative (for short “ld. DR”) relied upon the orders of lower authorities

Gopalakrishnan Pukalakkat Balakrishnan, Ernakulam vs. ACIT, Non-Corporate Circle, Kochi

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

ITA 89/COCH/2024[2011-12]Status: DisposedITAT Cochin30 May 2025AY 2011-12

Bench: Shri Inturi Rama Rao & Shri Prakash Chand Yadav

For Appellant: Sri.Sherry S.Ooommen, AdvocateFor Respondent: Smt.Leena Lal, Sr.AR

Section 147Section 148Section 69

hands of the assessee. Besides this, the AO also disallowed an amount of Rs.87,18 lakh being development charges and the cost of improvement of Rs.10.8 lakh incurred by the assessee with respect to the long term capital gain declared by the assessee. 3. Aggrieved with the order ... u/s.147 of the Act. So far as the other additions u/s.69 and disallowance of development 3 ITA No.89/Coch/2024. Gopalakrishnan Pukalakkat Balakrishnan. expenses and cost of improvement are concerned, we are of the view that the matter requires fresh consideration at the end of the AO, inasmuch

Joseph Puthenpurayil Augusthy, Puloorampara vs. DCIT(International Taxation, Circle, Kochi

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

ITA 615/COCH/2024[2012-13]Status: DisposedITAT Cochin30 May 2025AY 2012-13

Bench: Shri Inturi Rama Rao & Shri Prakash Chand Yadav

For Appellant: Sri.Richard Mathew, CAFor Respondent: Smt.Leena Lal, Sr.AR

interest of justice, has restricted the addition to Rs.20 lakh only. The CIT(A) has also disallowed the cost of improvement of Rs.3,16,124 claimed by the assessee. We are of the view that considering the status of assessee an NRI and his precious time, the purpose of justice ... would be served by deleting the addition of Rs.3, 16,124 in respect of cost of improvement, and so far as the cost of construction is concerned, we grant a partial relief of Rs.10 lakh and restrict the disallowance to the tune of Rs.10 lakh only. It is ordered accordingly

Premraj Singh, Haryana vs. Income Tax Officer Ward-2(1), Faridabad

The appeal is allowed for statistical purposes

ITA 1386/DEL/2024[2016-17]Status: DisposedITAT Delhi30 May 2025AY 2016-17

Bench: Ms. Madhumita Roy & Shri Khettra Mohan Royassessment Year: 2016-17

Section 143(3)Section 234DSection 54Section 54F

year 2000 20/3 6.66667 Circle Rate in 2000 5,75,000 4,79,167/- Indexation 4,79,167*254/100 12,17,083/- Less: Cost of improvement 11,50,000/- Less: Deduction u/s 54F Purchase of Residential House within stipulated time 1,15,82,887/- Balance Taxable Nil 5. The appellant

Dy.Commissioner of Income-Tax, 5(3)(1), Mumbai vs. Suashish Diamonds Ltd., Mumbai

ITA 5256/MUM/2024[2017-18]Status: DisposedITAT Mumbai29 May 2025AY 2017-18

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Appellant: Mr. Shivram a/w Rahul HakaniFor Respondent: Mr. Kiran Unavekar, Sr. DR

asset and the cost of any improvement thereto. For the purposes of computing long-term capital gains, the cost of acquisition and cost of improvement are to be substituted by the indexed cost of acquisition and the indexed cost of improvement, as defined in the Explanation to Section

DCIT, Mumbai vs. Suashish Diamonds Ltd., Mumbai

ITA 5248/MUM/2024[2022-23]Status: DisposedITAT Mumbai29 May 2025AY 2022-23

Bench: Shri Om Prakash Kant () & Shri Raj Kumar Chauhan ()

For Appellant: Mr. Shivram a/w Rahul HakaniFor Respondent: Mr. Kiran Unavekar, Sr. DR

Mrs. Chanda Runwal, Mumbai vs. ACIT Central Circle 4(1), Mumbai

ITA 6467/MUM/2024[2018-19]Status: DisposedITAT Mumbai23 May 2025AY 2018-19

Bench: Shri Narender Kumar Choudhry & Shri Prabhash Shankarassessment Year: 2018-19

For Appellant: Ms. Ritu Kamal Kishor, Ld. A.R. &For Respondent: Shri Mahesh Pamnani, Ld. Sr. D.R

Section 250Section 54Section 54F

denied”. 4.1 Further, the AO also denied the amount of Rs.50,81,123/- being claimed by the Assessee as indexed cost of improvement mainly on the following reason: “That the Assessee could not submit any documentary evidence in support of its claim of cost of improvement i.e. claim of expenditure ... aggrieved, challenged the said additions made by the AO, on account of disallowances of claims made u/s 54F of the act and indexed cost of improvement i.e. claim of expenditure incurred for the additions and alterations made to the capital asset/residential property at Deonar, by filing first appeal before

ACIT, Circle-24(1), New Delhi vs. Spring Infradev Ltd., New Delhi

ITA 611/DEL/2020[2016-17]Status: DisposedITAT Delhi23 May 2025AY 2016-17

Bench: Shri Yogesh Kumar Us & Shri Brajesh Kumar Singh[Assessment Year:2016-17]

Section 143(3)Section 45Section 47

Ld.CIT(A) also erred in deleting the disallowance of Rs. 12,97,20,753/- made by the AO on account of cost of improvement without appreciating the facts that the said amount was paid on account of interest on the funds raised from 2009 to Feb, 2015 should ... treated as cost of improvement.” CO No.118/Del/2024 3. During the course of appellate proceedings, the assessee filed an application under Rule-27 of the ITAT Rules, 1963, and a cross objection on 22.11.2024 on the ground that the capital asset being the land bearing Khasra no.32 situated at Fatehabad, Village