“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

Ramesh Kumar Soni, Shivpuri vs. AO, Ashoknagar

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

ITA 175/AGR/2024[2015-16]Status: HeardITAT Agra05 Feb 2025AY 2015-16

Bench: Shri M. Balaganesh(Through Virtual Hearing) Ramesh Kumar Soni, Vs. Ao, Near Nagar Palika, Gandhi Road, Neac Karera, Distt Shivpuri (Appellant) (Respondent) Pan: Azzps6156K Assessee By : Shri Rajendra Sharma, Adv Revenue By: Shri Shalenndra Srivastava, Sr. Dr Date Of Hearing 05/02/2025 Date Of Pronouncement 05/02/2025

For Appellant: Shri Rajendra Sharma, AdvFor Respondent: Shri Shalenndra Srivastava, Sr. DR

Section 147

assessment order taking the cast of acquisition of land at Rs. 2171000/- as against Rs. 2556735/- and further uploading non deduction of cost of improvement of Rs. 5735771/- and expenditure on transfer of Rs. 413419/-thereby affirming Ao's order computing the short term capital gains

Assisstant Commissioner of Income Tax, Circle-2, Ajmer vs. Baroda Rajasthan Kshetriya Gramin Bank, Ajmer

In the result, the appeal of the Revenue is dismissed and the C

ITA 1285/JPR/2024[2017-18]Status: DisposedITAT Jaipur05 Feb 2025AY 2017-18

Bench: Dr. S. Seethalakshmi & Shri Gagan Goyalassistant Commissioner Of Income Tax, Circle-2, Ajmer, C. R. Building – 305 001. ..... Appellant Vs.

For Appellant: Mr. Shailesh Mantri, CA, Ld. ARFor Respondent: Mr. Arvind Kumar, CIT, Ld. DR

Section 143(3)Section 147Section 148Section 250Section 254Section 43B

conclusion that there were reasons to reopen the assessment. [Para 15] ■ In the instant case, the only issue was the claim of cost of improvement against capital gains and there was no other issue. [Para 25] ■ For the above reasons, the Tribunal was right in allowing the assessee's appeal

Prabhat Kumar, Patna vs. ACIT, Circle-4, Patna

ITA 283/PAT/2024[2017-18]Status: DisposedITAT Patna04 Feb 2025AY 2017-18

IN THE INCOME TAX APPELLATE TRIBUNAL “PATNA BENCH” PATNA (VIRTUAL HEARING AT KOLKATA) SHRI SANJAY GARG, JUDICIAL MEMBER SHRI SANJAY

Vishwambhar Chaudhari, Katihar vs. ITO, Ward-1(5), Katihar

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

ITA 558/PAT/2022[2014-15]Status: DisposedITAT Patna04 Feb 2025AY 2014-15

Section 10(37)Section 234ASection 250Section 54F

department the assessee duly filed copy of impugned sale deed. Without prejudice to above, the learned Assessing Officer has erred in allowing cost of improvement at the rate of Rs. 7500/- per katha only ignoring the material on record. The cost of improvement as allowed by Assessing Officer is very

Ravi Kumar, Hyderabad vs. Income Tax Officer, Ward 4(4), Hyderabad

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

ITA 167/HYD/2024[2011-12]Status: DisposedITAT Hyderabad04 Feb 2025AY 2011-12

Bench: Shri Laliet Kumar & Shri Manjunatha G.आ.अपी.सं /Ita No.167/Hyd/2024 (निर्धारण वर्ा/Assessment Year: 2011-12) Ravi Kumar Vs. Income Tax Officer Hyderabad Ward-4(4) [Pan : Adopk6597R] Hyderabad (Appellant) (Respondent) निर्धाररती द्वधरध/Assessee By: Shri A.Srinivas, Ar रधजस् व द्वधरध/Revenue By: Dr.Sachin Kumar, Dr सुिवधई की तधरीख/Date Of Hearing: 20/01/2025 घोर्णध की तधरीख/Date Of 04/02/2025 Pronouncement: आदेश / Order Per. Manjunatha G., A.M: This Appeal Filed By The Assessee Is Directed Against The Order Dated 17.01.2024 Of The Learned Commissioner Of Income Tax (Appeals) [Ld.Cit(A)], National Faceless Appeal Centre (Nfac), Delhi, Pertaining To A.Y.2011-12. 2. The Brief Facts Of The Case Are That, The Assessee, An Individual Entered Into A Development Agreement Cum General Power Of Attorney Vide Document Number 560/2011 Dated 24.03.2011 With M/S Gayathri Construction Company For Joint Development Of A Property. The Assessee Had Not Disclosed The Transaction In His Return Of Income. Therefore, The Assessment

For Appellant: Shri A.Srinivas, ARFor Respondent: Dr.Sachin Kumar, DR

Section 147Section 148Section 54F

prove long-term capital gains declared from transfer of property in pursuant to joint development agreement and also necessary evidences in support of cost of improvement of Rs.66,72,435/-. The Assessing Officer had also called upon the assessee to file relevant evidences to prove deduction ... provisions of section 54F of the Act, recomputed capital gains derived from transfer of property, pursuant to joint development agreement and disallowed the cost of improvement claimed by the assessee, on the ground that no evidences has been furnished to justify the cost of improvement. The Assessing Officer had also

M/S. Beaver Automotive Private Limtied, Bengaluru vs. The Assistant Commissioner of Income Tax, Circle-1(1)(2), Bangalore

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

ITA 1433/BANG/2024[2017-18]Status: DisposedITAT Bangalore30 Jan 2025AY 2017-18

Bench: Shri Laxmi Prasad Sahu & Shri Soundararajan K.Assessment Year : 2017-18

For Appellant: Shri V. Srinivasan, AdvocateFor Respondent: Shri Subramanian, JCIT-DR

Section 115JSection 142(1)Section 14ASection 234B

case. 2. The learned CIT[A] is not justified in upholding the disallowance of Rs. 3,38,94,347/- being the indexed cost of improvement claimed while computing capital gains on Page 2 of 9 the sale of property under the facts and in the circumstances of the appellant ... persons in the earlier years has no connection with the sale of property made and therefore, the same could not be considered as cost of improvement of the capital asset sold by the appellant under the facts and in the circumstances of the appellant's case. 4. The learned

Himmat Ramjibhai Patel, Nagpur vs. ITO Ward 4(3), Nagpur

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

ITA 479/NAG/2024[2018-19]Status: DisposedITAT Nagpur27 Jan 2025AY 2018-19

Bench: Shri V. Durga Rao & Shri K.M. Roy, Accountant, Member

For Appellant: Shri Mahavir AtalFor Respondent: Shri Abhay Y. Marathe

Section 147Section 148Section 151A

circumstances of the case, the learned CIT(A) was justified in affirming the order of the assessing officer by allowing only 25% of cost of improvement claimed and disallowed balance 75%. 2 Himmat Ramjibhai Patel ITA no.479/Nag./2024 3. Assessee craves leave to add or alter any other ground ... total income of ` 23,40,640 and claimed aggregate deduction of ` 25,11,711, wherein assessee’s share was ` 18,25,020, as cost of improvement incurred due to development activities carried out on the property in question against which a copy of bill was also furnished. The Assessing Officer

Shriram Narayan Tikde, Nagpur vs. Income Tax, Ward 4(4), Nagpur

ITA 89/NAG/2021[2008-09]Status: DisposedITAT Nagpur27 Jan 2025AY 2008-09

Bench: Shri V. Durga Rao

For Appellant: Shri Abhay AgrawalFor Respondent: Shri Abhay Y. Marathe

Section 143(3)Section 147Section 148Section 154Section 234BSection 50C(2)Section 54Section 68

term capital gains of Rs.73,041 offered by the assessee. In doing so, the learned AO erred in not providing benefit of indexed cost of improvement of Rs.4,55,185 incurred during FY 2006-07, brokerage fees on sale of plot of Rs.25,000 and deduction under section 54 claimed ... assessee requests that, the matter be referred to DVO for finding the fair market value of the property sold. Deduction towards cost of improvement incurred on Shantinagar house 2.3 property of Rs.4,28,750 during FY 2006-07 Sr. Dates Remarks Paperbook No. 1. 1/10/2006 to Cost of improvement Refer

Pradeep Pinjani, Bhopal vs. ITO-1(2), Bhopal

Appeal is allowed as mentioned above

ITA 556/IND/2024[2016-17]Status: DisposedITAT Indore27 Jan 2025AY 2016-17

Bench: Shri B.M. Biyani & Shri Dinesh Mohan Sinha

Section 143(2)Section 143(3)Section 54F

justified to confirm the addition made by Id. AO by rejecting, without giving proper opportunity for production%erification of evidences, of the cost of improvement made by the assessee in land located in Sehore amounting to Rs 11,99,3007 (indexed cost being Rs 21,21,695~) and by rejecting ... justified to confirm the addition made by Ld. AO by rejecting, without giving proper opportunity for productionverification of evidences, of the cost of improvement made by the assessee in building situated at MP Nagar, Bhopal amounting to Rs 45,71,100~ (indexed cost being

Mr. Nateshan Sampath, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-3(1)(1), Bangalore

In the result, appeal filed by the assessee is allowed

ITA 1779/BANG/2024[2018-19]Status: DisposedITAT Bangalore22 Jan 2025AY 2018-19

Bench: Shri Waseem Ahmed & Shri Keshav Dubeyassessment Year: 2018-19

For Appellant: Sri Mahesh G., A.RFor Respondent: Shri V. Parithivel, D.R

Section 147Section 148Section 250Section 270ASection 270A(8)Section 274

assessment proceedings u/s 147 r.w.s. 144B of the Act also initiated the penalty proceedings with the following observations. “Since the assessee has claimed cost of improvement of Rs.45,60,000/-, the assessee has failed to substantiate the claim of expenditure of cost of improvement, penalty u/s 270A ... other hand supported the order of the authorities below and vehemently submitted that the assessee himself admitted the disallowance of cost of improvement in the order u/s 147 of the Act and therefore the penalty is justifiable. 5. We have heard the rival submissions and perused the materials available

Mrs. Neeta Gupta, New Delhi vs. ACIT, New Delhi

Appeals are allowed in above terms

ITA 6416/DEL/2016[2009-10]Status: DisposedITAT Delhi22 Jan 2025AY 2009-10

Bench: Sh. Satbeer Singh Godara & Sh. S. Rifaur Rahman

For Appellant: NoneFor Respondent: Sh. Dhiraj Kumar Jain, Sr. DR

Section 1Section 148Section 251(1)

year of construction thereof i.e. assessment year 2006-07 (F.Y. 2005-06) as well which culminated in addition of the corresponding cost of improvement of Rs.1,33,80,690/-, as “unexplained” in assessment framed on 26.03.2014. The Revenue is further very fair in clarifying before us that the learned assessing ... against the claim of cost of acquisition of Rs.80,32,812/- plus Rs.1,29,14,000/- as against the claim of cost of improvement of Rs.1,56,69,138/-). Accordingly, the STCG of Rs.1,19,36,000/- is worked out which has to be assessed in place of LTCG

Mrs. Neeta Gupta, New Delhi vs. ITO, New Delhi

Appeals are allowed in above terms

ITA 2186/DEL/2016[2006-07]Status: DisposedITAT Delhi22 Jan 2025AY 2006-07

Bench: Sh. Satbeer Singh Godara & Sh. S. Rifaur Rahman

For Appellant: NoneFor Respondent: Sh. Dhiraj Kumar Jain, Sr. DR

Section 1Section 148Section 251(1)

Mrs. Neeta Gupta, New Delhi vs. CIT (Appeals)-Xxvi, New Delhi

Appeals are allowed in above terms

ITA 5461/DEL/2014[2009-10]Status: DisposedITAT Delhi22 Jan 2025AY 2009-10

Bench: Sh. Satbeer Singh Godara & Sh. S. Rifaur Rahman

For Appellant: NoneFor Respondent: Sh. Dhiraj Kumar Jain, Sr. DR

Section 1Section 148Section 251(1)

Shikhar Chand Jain, Raipur vs. Income Tax Officer-3(1), Raipur

In the result, appeal of the assessee is allowed for statistical purposes in terms of the aforesaid observations

ITA 555/RPR/2024[2011-12]Status: DisposedITAT Raipur20 Jan 2025AY 2011-12

Bench: Shri Ravish Soodआयकर अपील सं. / Ita No. 555/Rpr/2024 "नधा"रण वष" / Assessment Year : 2011-12 Shikhar Chand Jain Gali No.3, Ashok Vihar Colony, Near Bansal School, Pandri, Raipur-492 001 (C.G.) Pan : Achpj2931Q .......अपीलाथ" / Appellant बनाम / V/S. The Income Tax Officer-3(1), Raipur (C.G.) ……""यथ" / Respondent

For Appellant: Shri Veekaas S Sharma, CAFor Respondent: Smt. Anubhaa Tah Goel, Sr. DR

Section 142(1)Section 143Section 143(3)Section 154Section 250Section 250(6)

income under the head Long Term Capital Gain (LTCG) on sale of the subject property, had, inter alia, raised claim for deduction of cost of improvement aggregating to Rs.9.75 lacs, viz. (i) improvement carried out during the year 1990-91: Rs.6,25,000/-; and (ii) improvement carried out during ... Sale consideration Rs.45,00,000 Less: Stamp duty Rs.4,20,630/- Rs.40,79,370/- Purchase cost (82,125 x 711/150) Rs.3,89,273/- Cost of improvement (As discussed Nil above) Long term capital gain Rs.36,90,097/- Accordingly, the A.O vide his order passed u/s.143(3) r.w.s

Madan Lal Choudhary, Jaipur vs. ITO-7(1), Jaipur

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

ITA 1059/JPR/2024[2017-18]Status: DisposedITAT Jaipur20 Jan 2025AY 2017-18

For Appellant: Shri Rajendra Sisodiya (Adv.)For Respondent: Shri Anup Singh (Addl.CIT)

Section 143(3)Section 250Section 250(6)Section 48

facts and in law in confirming the addition made by the AO who had rejected the explanation of assesse and not considered cost of improvement of Rs.2,50,000/- u/s 48 in computing capital gain. 4. The Ld CIT(A) has erred on facts and in law in confirming

Shivani Bhasin Sachdeva, Mumbai vs. Assessment Unit, Income Tax Department

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

ITA 3218/MUM/2024[2021-22]Status: DisposedITAT Mumbai20 Jan 2025AY 2021-22

Bench: Sunil Kumar Singh, Hon’Ble

For Appellant: Shri Sukhsagar Syal, AdvocateFor Respondent: Shri Bhangepatil Pushkaraj Ramesh, Sr. DR

case and in law, the learned Assessing Officer erred in disallowing the expenses incurred for the interior fit-outs by the Appellant as cost of improvement in computing the capital gains on the sale of the property. 2. Without prejudice to the above, once the expenses incurred for interior ... outs were not allowed as cost of improvement, the learned Assessing Officer ought to have allowed the same as cost of acquisition of the property while computing the capital gains of the property.” 3. Briefly stated the facts of the case are that the assessee filed her return of income

Pernia Qureshi Consultancy Pvt Ltd, New Delhi vs. DCIT Central Circle-07, New Delhi

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

ITA 992/DEL/2020[2014-15]Status: DisposedITAT Delhi20 Jan 2025AY 2014-15

Bench: Ms. Madhumita Roy & Shri Naveen Chandra

For Appellant: Shri Vipin Jain, FCAFor Respondent: Shri Manish Gupta, Sr. DR

Section 143(2)Section 147Section 148Section 151Section 292BSection 45Section 54

quashed. 5. That the Ld Assessing Officer has erred in not allowing deduction of Rs. 8,87,225, on account of “indexed cost of improvement", a statutory deduction to be allowed in computing the "Capital gain" chargeable to tax under section 45 of the I Tax Act, 1961. 6. That ... indexed cost of the property Rs. 28,41,700 (c) Gross capital gain (a)-(b) Rs. 1,91,18,300 (d) Less indexed cost of improvement (-) Rs. 26,61,600 (e) Less transfer expenses (-) Rs. 2,25,000 (f) Capital gain chargeable

Madhusudhan Jaju, Hyderabad vs. Income Tax Officer, Ward-1, Sangareddy

In the result, the C.O. of the Revenue is allowed for statistical

ITA 442/HYD/2023[2013-14]Status: DisposedITAT Hyderabad15 Jan 2025AY 2013-14

For Appellant: Shri P. Murali Mohan Rao, C.AFor Respondent: : Shri SPG Mudaliar, SR-DR

Section 143(3)Section 148Section 54F

reassessment. 14. The Ld. CIT(A) ought to have appreciated the fact that the AO erred in disallowing the cost of improvement claimed for Rs.7,50,000/- with out considering the fact that the data relates to long back years. 15. The Ld. CIT(A) ought to have appreciated that ... lakhs towards payment made to litigants of the land and litigation expenses. The assessee had also claimed the expenditure of Rs.7.50 lakhs towards cost of improvement and accordingly claimed index cost of the improvement at Rs.13,68,697/-. After claiming all the expenses, the assessee worked out Long Term Capital

Dhirubhai Bavabhai Gevaria, Surat vs. Income Tax Officer, Ward-2, Navsari

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

ITA 689/SRT/2024[2013-14]Status: DisposedITAT Surat10 Jan 2025AY 2013-14

Bench: Shri Pawan Singh & Shri Bijayananda Prusethआयकर अपील सं./Ita No.689/Srt/2024 (Ay 2013-14) (Hybrid Processing Hearing) Dhirubhai Bavabhai Gevaria Income Tax Officer, Ward-2, Kamalpark Society, Jalalpore Navsari, Income Tax Office, Room बनाम Road, Navsari-396 445 No.207, Aaykar Bhavan, Nr. Vs [Pan : Asjpg 2040 H] Charpool, Navsari-396 445 अपीलाथ"/Appellant ""थ" /Respondent

Section 144Section 148Section 254(1)Section 50CSection 50C(2)

confirming the action of the Assessing Officer has erred in not giving any deduction towards cost of acquisition of Rs.9,00,400/- and cost of improvement of Rs.14,50,000/- of impugned property. 6.It is therefore prayed that above addition made by Assessing Officer and confirmed by Commissioner of Income

The Asstt. Commissioner of Income Tax, Central Circle-1(2), Ahmedabad vs. Shri Kailash Ramavatar Goenka, Ahmedabad

ITA 67/AHD/2023[2019-20]Status: DisposedITAT Ahmedabad10 Jan 2025AY 2019-20

Bench: Shri T.R. Senthil Kumar & Shri Makarand V. Mahadeokar

For Appellant: Shri Tushar Hemani, Sr.Advocate &For Respondent: Shri R.N. Dsouza, CIT-DR &

Section 132Section 153A

must also be adopted in accordance with Section 48 of the Act. Clause (iii) of the Explanation to Section 48 clearly defines "indexed cost of improvement" to include indexation up to the year in which the asset is transferred, irrespective of the timing of the receipt of sale proceeds