Vijay Lakhmichand Israni Vs ITO (ITAT Bangalore)
These appeals were filed by the assessees against assessment orders passed under Sections 143(3) read with 144C(13) of the Income Tax Act for the assessment year 2022-23. Since both appeals involved common issues and amounts, the Tribunal disposed of them through a single consolidated order.
The assessee, a senior citizen non-resident earning income from house property, capital gains and other sources, filed the return declaring total income of ₹35,67,355 for AY 2022-23. The case was selected for scrutiny, and notices under Sections 143(2) and 142(1) were issued. During the relevant year, the assessee jointly sold a residential property in Bangalore for ₹4.02 crore (representing his 50% share). The property was originally purchased in 2005 as a non-furnished, dilapidated, and uninhabitable plot, after which the assessee claimed to have incurred capital expenditure to construct and make the house habitable.
The Assessing Officer (AO) disallowed three components of the assessee’s capital gains computation:
1. ₹25,72,807 claimed as cost of improvement towards items such as rooftop solar plant, air conditioners and similar items, treating them as personal effects.
2. ₹4,99,000 claimed as travel and courier expenses, holding they were not allowable as sale expenses under the Act.
3. ₹11,35,023 claimed as ‘other charges’ forming part of cost of acquisition, on grounds that the details provided were approximate, without bills, vouchers, cheque numbers or supporting evidence.
Based on these disallowances, the AO assessed total income at ₹1,20,25,302 by adding ₹84,57,947 under capital gains.
