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2023 (12) TMI 1230 - AT - Income TaxLTCG - Deduction towards the ‘Cost of Improvement’ in the Lucknow House u/s 54 - AO observed that the photographs produced by the assessee were vague and insufficient to prove the year of incurrence of expenditure as claimed - HELD THAT:- We find that the AO has categorically accepted that Air conditioning, modular kitchen and kitchen chimney, tube-well and submersible pump are not a part of the building. AO also accepts the fact that the building was valued as per the CPWD guidelines. Having said so, the AO holds that the expenses relatable to Air conditioning, modular kitchen and kitchen chimney, tube-well and submersible pump are not allowable as cost of improvement. The AO again agrees that the valuation report cannot be completely disregarded and parts of it are based on evidence and is in line with existing CPWD guidelines but has an objection that the photographs produced by the assessee are vague and insufficient to prove the incurrence of expenditure. AO also held that the photographs do not portray the exact specification of the improvement made. It cannot be said that the house operated, made to live without a modular kitchen. The availability of submersible pump is a finding of fact and not mentioning it in the agreement doesn’t entitle the deduction. All the improvements made necessarily lead to the improvement in the value of the sale. The authorities have blown hot & cold in disallowing the expenditure. The selective reading of the sale agreement and lack of mentioning of pump and modular kitchen cannot necessarily lead to disallowance. AO could not bring anything on record that the statement given by the valuer is wrong on facts or had inconsistencies. Hence, we allow the appeal of the assessee on this ground. Cost of improvement - Bangalore property - We find that the revenue has not disputed the import of Pneumatic Vacuum Elevator (PVE) however held that it is not essential for the improvement of the house to make it habitable. Whether to have a lift in the house or not is certainly not the purview of the Assessing Officer. Notwithstanding that, we find that the father of the assessee, Brig. V. K. Ghai is 90 years old staying with the assessee which is also a fact on record before the AO. Hence, we hold that the sum of Rs. 12,00,000/- incurred for installation of lift is an allowable item of cost of improvement. The amount of Rs. 1,80,000/- was made with regard to installation of the lift and the other sundry expenses to make the house habitable and hence the amounts are also to be allowed. Hence, we allow the appeal of the assessee on this ground. Eligibility for deduction u/s 54 though the assessee did not purchase new house property himself rather got it as gift from parents - As find that the ld. CIT(A) had diligently, meticulously & conscientiously, after considering the Hon’ble jurisdictional High Court judgments in the case of ACIT Vs. Suresh Verma [2012 (3) TMI 256 - ITAT DELHI] & CIT Vs. Kamal Wahal [2013 (1) TMI 401 - DELHI HIGH COURT] came to a valid conclusion that the investments have been made by the assessee from his bank account of Rs. 17,65,000/- on 14.08.2014 and Rs. 3,31,82,000/- dated 21.08.2014 for payment to Sh. V. Ravindran, seller of the property and the parents have gone to registration owing to the absence of the assessee in India. It is also a fact that such registered property has also been gifted to the assessee by the parents on 10.06.2015. Hence, we decline to interfere with the order of the ld. CIT(A) invoking rule of purposive construction and object of Section 54F and allowing the deduction u/s 54F on the house registered in the name of the parents of the assessee.
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