Prabhat Bhatia Vs Circle (ITAT Delhi)
Material Facts
The assessee, a Non-Resident Indian (NRI), appealed against the assessment order passed under Sections 147 read with 144 of the Income-tax Act, 1961 for Assessment Year 2015-16.
The dispute related to computation of capital gains arising from the sale of an immovable property for Rs.60,00,000. The property had originally been allotted by the Delhi Development Authority (DDA) to the assessee’s uncle in Financial Year 1986-87 for Rs.1,66,600 and was gifted to the assessee on 18.03.2011. Before the sale, the assessee obtained a valuation report dated 01.11.2014 from a registered valuer, who estimated the cost of improvements undertaken during Financial Years 1986-87 and 1994-95 at Rs.5,17,041 and Rs.5,44,565 respectively. Based on the indexed cost of acquisition and improvements, the assessee computed a long-term capital loss.
The Assessing Officer rejected the claimed cost of improvement for want of supporting documentary evidence, accepted only the original cost of acquisition of Rs.1,66,600, and computed taxable capital gains. The DRP upheld the Assessing Officer’s view, observing that the claimed improvement costs were exorbitant compared to the original purchase price and unsupported by documentary evidence. The final assessment resulted in an addition of Rs.45,55,527 on account of capital gains.
