Case Law Details
Jayanti Vasishta Vs ITO (ITAT Bangalore)
In a recent decision, the Income Tax Appellate Tribunal (ITAT) Bangalore bench ruled in favor of the appellant, Ms. Jayanti Vasishta, allowing indexed cost of construction for a penthouse regularized on the date of sale. The case, titled Jayanti Vasishta Vs ITO, pertained to the assessment year 2014-15 and presented significant legal arguments regarding the computation of capital gains.
The appeal stemmed from a scrutiny assessment conducted by the Income Tax Officer (ITO), which was subsequently reopened under section 148 of the Income Tax Act. The appellant, Ms. Jayanti Vasishta, had declared income from the sale of a penthouse but disputed certain additions made by the assessing officer during the assessment proceedings.
One of the primary contentions raised by the appellant was regarding the indexed cost of acquisition and construction. The appellant argued that the property in question, acquired through gift in the financial year 2002-03, should be eligible for indexation benefits from April 1, 1981, as it was originally obtained before that date and subsequently converted to residential use in 1988-89.
The assessing officer disallowed the indexed cost of acquisition and construction, contending that the property did not qualify as a capital asset before its conversion. Furthermore, the officer raised concerns about the legality of the construction, claiming it was not part of the sanctioned plan and therefore ineligible for capital gains treatment.
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