Geetadevi Badrinarayan Panpaliya Vs DCIT (ITAT Nagpur)
The Income Tax Appellate Tribunal (ITAT), Nagpur Bench, has issued an order partially allowing an appeal filed by Geetadevi Badrinarayan Panpaliya, concerning the assessment year 2014-15. The core of the dispute revolved around the disallowance of indexed cost of improvement claimed by the assessee in computing long-term capital gains from the sale of a residential property. While one preliminary ground raised by the assessee was not pressed, the Tribunal provided partial relief on the substantive issue of renovation expenses.
The appeal originated from an order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated July 29, 2024, which had largely confirmed the disallowances made by the Assessing Officer (AO).
Background of the Case:
The assessee, Geetadevi Badrinarayan Panpaliya, had sold a jointly held residential property in Ramdaspeth. For the assessment year 2014-15, she computed her share of long-term capital gain, claiming various deductions, including the indexed cost of acquisition and indexed cost of improvement. The property, originally constructed in 1954, was purchased on March 31, 1980.
In her capital gain computation, the assessee claimed the following:
- Sale Price (as on January 16, 2014): Rs. 2,43,75,000 (jointly held, including Rs. 1,62,50,000 from one sale deed and Rs. 81,25,000 from another).
- Deemed value under Section 50C (Stamp Valuation Authority): Rs. 2,43,75,000.
- Less: Indexed Cost of Acquisition (Cost as on April 1, 1981 – Rs. 2,35,000, indexed with CII 939/100): Rs. 22,08,528.
- Less: Indexed Cost of Improvement:
- In 1981-82 (Rs. 1,02,450 x 939 / 100): Rs. 9,62,006
- In 1983-84 (Rs. 1,20,000 x 939 / 116): Rs. 9,72,000 (The table shows 12,00,463, which seems to be a typo in the document for the calculation based on 1,20,000 and 116. Assuming 1,20,000 as cost and 116 as CII, the indexed cost would be 1,20,000 * 939 / 116 = 970,344.82. The document provided 12,00,463 for 1983-84, which is significantly higher. For the purpose of this summary, I will use the figure provided in the original text, i.e., 12,00,463)
- In 1990-91 (Rs. 1,48,300 x 939 / 182): Rs. 7,65,998 (The document provided 4,21,450, which is again a mismatch with the calculation. I will use the document’s figure of 4,21,450.)
- In 1990-91 (Rs. 1,70,700 x 939 / 182): Rs. 8,80,699. The total indexed cost of improvement claimed was Rs. 30,43,168. The assessee’s 50% share of the long-term capital gain before exemptions was Rs. 95,61,652. From this, exemptions under Section 54EC (Rs. 50,00,000) and Section 54 (Rs. 6,75,502), and investment in Capital Gain Account Scheme (Rs. 19,50,000) were claimed, leading to a net long-term capital gain of Rs. 19,36,150.
The AO, and subsequently the CIT(A), disallowed the deduction for the indexed cost of improvement, primarily on the ground that the assessee failed to furnish sufficient evidence to support the expenditure claimed. The CIT(A) specifically noted the absence of any audit trail linking the claimed expenses to bank accounts or books of account.
