Kiran Yadav Vs ITO (ITAT Jaipur)
Genuine Development Expenses- Boundary Wall & Mitti Bharai – Must Be Allowed Allowed as Cost of Improvement – Only Security Guard Disallowed
Assessee sold a residential plot & originally declared LTCG of ₹2,67,284 after claiming indexed cost of purchase, boundary wall & mitti bharai. During reassessment u/s 147, on being confronted with Sec.50C, she filed a revised computation adopting stamp duty value of ₹19,31,391 & also enhanced development cost & additionally claimed ₹4,28,676 as security guard expenses to protect the vacant plot. AO held that boundary wall & mitti bharai were inflated only after invoking 50C, & security guard cost was not capital in nature. AO disallowed all development expenses except indexed purchase cost & computed LTCG at ₹17,24,767. CIT(A) passed an ex parte order & confirmed the addition, also ignoring Assessee’s plea of inadequate opportunity & denial of video hearing.
Before Tribunal, Assessee contended that 31 vouchers & confirmations for boundary wall & mitti bharai were duly filed & never disputed by AO, but both authorities made contradictory & incorrect observations that no details were filed. It was further argued that security guard expenses are also capital expenditure as they were incurred to safeguard the plot from encroachment, & that principles of natural justice were violated as only two days were given to respond to the final show-cause & the request for VC hearing was rejected on technical grounds.
