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TMI Blog2023 (12) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case and in law, the learned Commissioner of Income-tax Appeals ["CIT(A)"] erred in upholding the Assessing Officer's ("AO") order of arbitrarily disallowing the deduction of Rs. 12,53,213/- towards the 'Cost of Improvement' in the Lucknow House u/s 54 of the Income-tax Act, 1961 ("ITA")? 2. Whether, on the facts and circumstances of the case and in law, the learned CIT(A) erred in disregarding the certificate dated March 14, 2019, issued by a registered Valuer stating that improvement carried out at Lucknow House such as installation of central air conditioning, modular kitchen, chimney and tube-well are part of the residential house essential to make the residential unit habitable? 3. Whether, on the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cost of acquisition alongwith cost of improvement of Rs. 97,09,344/- was based on valuation report of a registered valuer. The AO found on the basis of the statement of the valuer, the items included in cost of improvement are based solely on the version of the client. The AO observed that the photographs produced by the assessee were vague and insufficient to prove the year of incurrence of expenditure as claimed. Accordingly, the AO disallowed the indexed cost of improvement to the tune of Rs. 12,53,213/- while computing the capital gain in this case. 6. The cost of improvement as claimed by the assessee across different years was as under: Year Improvements as recorded in valuation report Cost of improvement according to valuation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report cannot be completely disregarded and parts of its that are based on evidence and is in line with existing CPWD guidelines and plinth area rates are acceptable. However, the figures and inclusions that, in the Valuer's own admission in his statement, are based solely on the version of the client (the assessee) cannot be accepted as they are not backed by any verifiable reasoning, or with any supporting documents. Even otherwise, the Valuer's report is one of the several documents that need to be taken into consideration while framing an assessment and cannot be the final worked regarding the cost of acquisition and cost of improvement. Photographs produced by the assessee are vague and insufficient to prove the incurrence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mp and modular kitchen cannot necessarily lead to disallowance. The 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: 9. In the case of Bangalore property, the assessee claimed an amount of Rs. 13,80,146/- as cost of improvement which includes a sum of Rs. 12,00,000/- incurred for installation of lift. In this regard, the assessee submitted a handwritten note signed by one Sh. Manjunath admitting the receipt of Rs. 4,50,000/- and Rs. 3,75,000/- dated 10.09.2014 and 03.09.2014 respectively. We find that the revenue has not disputed the import of Pneumatic Vacuum Elevator (P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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