Jatinder Kumar Singla Vs ITO (ITAT Chandigarh)
In the case of Jatinder Kumar Singla vs. ITO, the ITAT Chandigarh addressed an appeal concerning the partial disallowance of property improvement costs claimed during the calculation of long-term capital gains for the Assessment Year 2017-18. The Assessing Officer (AO) had previously disallowed 10% of the claimed improvement costs on an ad-hoc basis, despite accepting the architect’s valuation of the additional construction work as genuine. The assessee appealed against this decision, contesting the reduction as unreasonable.
After reviewing the assessment order and hearing the Department Representative, the Tribunal found that the AO’s disallowance lacked any substantial reasoning or basis. The architect’s valuation, deemed credible by the AO, was upheld by the Tribunal as an accurate reflection of the improvement costs. Consequently, the ITAT allowed the full deduction of the claimed expenses, overturning the AO’s decision. The appeal was resolved in favor of the assessee, with the order pronounced on December 3, 2024.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
The present appeal has been preferred by the assessee against the order dated 26.03.2024 passed by the Ld. Addl. / JCIT (A)-2, Coimbatore [hereinafter referred to as ‘Addl. CIT(A)’], for the Assessment Year 2017-18.
2. The Assessee is aggrieved by the action of the ld. CIT(A) in upholding the disallowance of Rs. 5,92,409/- being 10% of the amount claimed by the Assessee as cost of improvement of property while claiming Long Term Capital Gain.
3. None appeared on behalf of the Assessee despite notice. I, therefore, proceed to decide the appeal on merits after hearing the ld. DR and going through the record.
4. In this appeal the issue is relating to the cost of improvement claimed by the Assessee for the purpose of calculation of the cost of acquisition for computing capital gains on the sale of property. A perusal of the relevant para 10 of the assessment order would reveal that the Assessing Officer had taken into consideration the Certificate of architect for the purpose of valuation of additional construction work and has also observed the same is to be taken as genuine. However, he has disallowed 10% of the cost of improvement on adhoc basis. This action of the Assessing Officer in my view, is not based on any plausible reason. Therefore, the impugned addition is ordered to be deleted.
5. The appeal of the Assessee stands allowed.
In the result, appeal of the Assessee is allowed.
Order pronounced on 03.12.2024.
