Kulavendra Kaur Vs ITO (ITAT Dehradun)
ITAT Dehradun: Partial Relief on Cost of Construction—Ad-hoc Allowance Granted in Absence of Complete Proof
The Income Tax Appellate Tribunal partly allowed the assessee’s appeal for AY 2016-17, granting partial relief on the claimed cost of construction while sustaining an ad-hoc disallowance.
The assessee had sold a residential property for ₹32.72 lakh and declared short-term capital gains, claiming ₹25 lakh as cost of construction. The Revenue disallowed the entire construction cost for want of evidence, which was upheld by the CIT(A).
On appeal, the Tribunal observed that while the assessee failed to fully substantiate the construction cost, an outright denial was also unjustified given the practical difficulties of verification in the unorganised sector. Striking a balance, the ITAT restricted the disallowance to ₹12 lakh and allowed ₹13 lakh towards construction cost, clarifying that the ad-hoc approach shall not be treated as a precedent.
Accordingly, the appeal was partly allowed, with consequential recomputation as per law.
FULL TEXT OF THE ORDER OF ITAT DEHRADUN
This assessee’s appeal for Assessment Year 2016-17 , arises against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2024-25/10734919886(1) dated 20.02 .2025, in proceedings u/s 147 r .w .s. 144 of the Income Tax Act, 1961.
