Shreshta Sheel Patil Vs ITO (ITAT Bangalore)
ITAT Allows Earlier Indexation Year Because Possession & Payment Occurred Before Registration
In Shreshta Sheel Patil Vs ITO, the Income Tax Appellate Tribunal (ITAT), Bangalore, adjudicated an appeal concerning computation of long-term capital gains, specifically the correct year of acquisition for indexation and the allowability of construction and improvement costs.
The assessee had not originally filed a return under Section 139(1) and the case was selected under the Non-filers Monitoring System due to sale of immovable property. Reassessment proceedings under Section 147 were initiated. The assessee declared capital gains based on a one-third share in a property sold for ₹2.5 crore and adopted the Cost Inflation Index (CII) of 305 for FY 1996–97, claiming acquisition on 10.04.1996.
The Assessing Officer (AO) held that the purchase deed was registered on 24.04.1998 and treated FY 1998–99 (CII 351) as the year of acquisition. The AO also disallowed ₹26 lakh claimed as construction cost and ₹58,32,166 claimed as indexed improvement cost due to absence of documentary evidence, restricting deduction to one-third of purchase cost and registration charges. The CIT(A) upheld the AO’s findings, rejecting reliance on recitals in the registered deed and dismissing the plea under Rule 6F regarding non-maintenance of records.
