Dilip Mohandas Devani Vs ITO (ITAT Ahmedabad)
The case of Dilip Mohandas Devani vs. ITO before the ITAT Ahmedabad involved an appeal by the assessee against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2012-13. The appeal focused on two key issues: the disallowance of the indexed cost of improvement and the restriction of a deduction claimed under Section 54 of the Income Tax Act.
The facts of the case trace back to the sale of an immovable property in 2012, which was co-owned by the assessee, his minor daughter, his spouse, and two others. The sale deed recorded a consideration of ₹41,00,151, but the Assessing Officer (AO) determined the stamp duty value was significantly higher at ₹67,14,284. The AO, therefore, applied Section 50C of the Income Tax Act, which mandates the use of the higher stamp duty value for calculating capital gains. The assessee’s claim for a long-term capital loss was rejected, and a long-term capital gain of ₹15,99,618 was computed.
The assessee also claimed a deduction for the cost of improvement of ₹6,00,300, which was paid in cash for work done over two decades ago. The AO and the CIT(A) disallowed this claim due to a lack of evidence of payment through banking channels. Furthermore, the assessee claimed an exemption under Section 54 for a new property jointly purchased with his wife. The AO restricted the deduction to 50% of the investment, assuming an equal contribution since the property was jointly owned, even though the assessee claimed a 2:1 investment ratio based on their respective shares of the sale proceeds from the old property.
