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2022 (5) TMI 822 - AT - Income TaxCapital gain computation - Short term capital - claim of proportionate cost of acquisition as well as cost of construction - AO disallowed the claim of cost of construction on the ground that the assessee has not produced any documentary evidence like purchase of construction material and other expenses except producing the valuation report which is also not based on any evidence indicating any improvement taken place in the property - AO doubted the claim of cost of construction of the second floor of the property in view of the fact that the assessee has sold the property within a period of two and a half months after it was purchased and therefore, how the property was constructed within such a short spam of time - HELD THAT:- When the second floor of the property in question came into existence after the property was purchased by the assessee then the AO was required to get the fair cost of construction through the reference to the Valuation Officer. In the absence of such an exercise on the part of the AO, the cost of construction as determined by the registered valuer in the valuation report cannot be rejected - AO has also not given its finding about the proportionate cost of acquisition being cost of land attributable to the second floor and simply rejected the claim on the ground that the assessee has failed to support the claim by submitting documentary evidence. The determination of cost of land is not a complicated issue as prevailing rate of land as per the Government circulation or the valuation of the land by the Stamp Duty authority can be taken as cost of the total land on which the second floor is constructed. AO has not even attempted to verify the correctness of the cost of land and construction claimed by the assessee. Hence, in the absence of any proper verification and enquiry by the AO, the claim of proportionate cost of acquisition as well as cost of construction based on the valuation report cannot be denied. Accordingly, the addition made by the AO is deleted. - Decided in favour of assessee.
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