Amount spent on consumables cannot be claimed as an improvement cost when calculating capital gains: ITAT





Amount Spent - Consumables - Capital Gains - Cost of Improvement - ITAT - Tax Scan

The Income Tax Appellate Tribunal, Mumbai Bench has ruled that the amount spent on consumable items including sofa, tiles, etc. cannot be claimed as a cost of improvement in calculating the amount of capital gains under the provisions of the Income Tax Act, 1961.

The reviewer is saddened by the rejection of the claimed improvement costs. In this regard, it is noted that in response to the AO’s inquiry as to the details of the cost of improvement incurred by the appellant, the details of the cost of improvement are submitted along with the revised claim of improvement cost, in which, the cost of the improvement have been reduced from Rs.19.83.181/- to Rs.10.87.891/-. Against the revised claim of Rs.10.87.891/-, the AO had awarded a claim of Rs.3.18.300/- consisting of registration and stamp duties as purchase costs and another amount of Rs.74.681/- incurred for the purchase of tiles and laying tiles as costs of the improvement. However, for the remaining amount of Rs.6,94,910/-, no corroborative evidence was submitted by the appellant and therefore the AO rejected the claim of cost of improvement to that extent.

Accountant member, Mr. Shemeem Yahya, upheld the order of the tax authorities, noting that “from the details it appears that the appraiser is claiming the cost of improvement, which is consumables due to furnishing a bank, etc. The authorities below are correct that these items cannot be considered as the cost of improvement for the purpose of calculating the capital gain. The appeal of the above decision of the Hon’ble Delhi High Court is also relevant and applicable to the facts of the case. Therefore, I maintain the orders of the following authorities.”

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Meeta Hasmukh Gandhi vs ITO-26 (2) (2)

Counsel for Defendant: Shri Airiju Jaikiran

CITATION: 2022 TAX SCAN (ITAT) 335




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