Vishwajeet Raja Patil Vs AO (ITAT Mumbai)
Capital Gains Recomputed A new: ITAT Mumbai Remands Case to Examine Mortgage & Loan Deductions on Property Sale
ITAT Mumbai (B Bench) in Vishwajeet Raja Patil & Bharat Raja Patil vs AO (ITA Nos. 4239 & 3700/Mum/2025, AY 2013-14, order dated 23.12.2025) has set aside the capital-gains computation and remanded the matter to the Assessing Officer for de-novo consideration, granting the assessees one more opportunity to substantiate their claims with documentary evidence.
The assessees (brothers) jointly sold an immovable property for ₹7 crore. In reassessment proceedings, the AO rejected deductions claimed towards repayment of bank mortgage, other loans, security deposit, and transfer expenses, allowing only limited cost of acquisition/improvement, on the ground that no supporting evidence was furnished. CIT(A) partly allowed the appeal but did not decide the core issues on merits.
Before ITAT, the assessees contended that the property was mortgaged to a bank, the loan proceeds were advanced to a group company, and upon the company’s failure to repay, the property had to be sold to clear the mortgage and other liabilities, which were wholly and exclusively connected with the transfer. The Tribunal noted that adequate evidence had not been produced earlier.
Invoking principles of natural justice, ITAT held that the claims require merits-based adjudication after verification. Accordingly, it restored the issues to the AO, directing the assessees to cooperate and file complete documentary evidence. The remand order applies mutatis mutandis to both appeals.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
