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2017 (6) TMI 1156 - AT - Income TaxCost of improvement eligible for deduction u/s 48(2) - cost of the new asset which is provided to RFC on long term irrevocable lease - Held that:- Hon’ble Mumbai High Court in the case of CIT Vs. Piroja C. Patel reported in [1999 (3) TMI 38 - BOMBAY High Court] held that payment made to hutment dwellers for vacation of property amounted to cost of improvement and accordingly allowable as expenditure within the meaning of section 48 r.w.s. 55 of the I.T. Act, 1961. Thus we are of the considered view that the cost of the new asset which is provided to RFC on long term irrevocable lease against the vacation of assessee’s property from its possession has a direct nexus with the property sold during the year and therefore the cost of ₹ 1,01,97,208/- paid by the assessee for the acquisition of new property is the cost of improvement eligible for deduction u/s 48(2) of the Act out of the total sale consideration for the purpose of computing the capital gain. Accordingly the Ground is allowed in favour of assessee.
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