Komal Gurumukh Sangtani Vs ITO (ITAT Mumbai)
Section 48- Capital gains – Cost of improvements-
The assessee always pleaded that the purchase of various items as tabulated supra were made in order to make the house habitable and proper for living condition which is very normal and would be incurred by every citizen of the country who is purchasing a property from a builder.
From the perusal of the list of expenses incurred as stated supra, we find that majority of the items are embedded to the wall and becomes part and parcel of the building itself which is subject matter of sale by the assessee and her husband. Of course in the said list, items like refrigerator, air conditioner, LED Tvs, furnitures, dining tables etc., would certainly fall under the ambit of “personal effects” not liable for deduction. However, in respect of remaining items, the assessee would certainly be eligible for deduction as it becomes an integral part of the building.
It is not in dispute that majority of the items were also purchased by making payments in cheques through regular banking channels as stated earlier. It is not in dispute that assessee never carried on any business and accordingly not liable for any tax audit. Hence, there is no bar for the assessee to incur certain expenditures for the purpose of house in cash. As long as the source for the said cash payment is explained from the disclosed income of the assessee, no fault could be attributed on the assessee. It is not a case of the Revenue that the assessee alongwith her husband did not have sufficient cash or cheque source to make the aforesaid payments. Hence, the aforesaid payments cannot be summarily disbelieved by the Revenue. In view of the aforesaid observations, we hold that assessee would be eligible for deduction along with her husband totaling to Rs.9,68,575/- towards cost of improvement made in the house which has to be reduced while computing capital gains in the hands of the assessee as well as in the hands of her husband. The assessee along with her husband would also be eligible for due indexation benefit on the same.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These appeals in ITA No.1200/Mum/2020 & 1201/Mum/2020 for A.Y.2010-11 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-45, Mumbai in appeal No. CIT(A)-45/ ITO-33(1)(3)/ITA-40/2017-18 & CIT(A)-45/ITO-33(2)(2)/ITA-98/2017-18 dated 26/07/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 30/11/2017 & 27/12/2017 respectively by the ld. Income Tax Officer 33(1)(3), Mumbai (hereinafter referred to as ld. AO).
Identical issues are involved in both these appeals and hence, they are taken up together and disposed of by this common order for the sake of convenience.
2. None appeared on behalf of the assessee. We proceed to dispose of these appeals by hearing the ld. DR and after perusing the materials available on record.
2.1. Let us take up the appeal of the assessee in ITA No.1200/Mum/2020 for A.Y.2010-11 in the case of Komal Gurumukh Sangtani.
3. We have heard the ld. DR and perused the materials available on record. We find that assessee is an individual NRI and had not filed her return of income u/s.139 of the Act for A.Y.2010-11. The assessee had entered into a property transaction during the year along with her husband resulting in capital gains. Since, no return of income was filed, the ld. AO reopened the assessment after issue of notice u/s.148 of the Act. The facts that are relevant for the purpose of adjudication of the issue of capital gains are as under:-
3.1. The assessee purchased two residential flats jointly with her husband Shri Gurumukh I Sangtani in the building known as “The Breezy Corner”, Mahavir Nagar, Kandivili (W), Mumbai. The details of the said purchases are as under:-
