Mumbai ITAT Admits Rule 29 Evidence and Remands Capital Gain Cost Claims

Aruna Kailashprasad Malpani Vs ITO (ITAT Mumbai)

Section 48 Claims Get a Second Chance – Rule 29 Evidence Admitted for Cost of Improvement and Brokerage

Background

The assessee, an individual, filed her return of income for Assessment Year 2022-23 declaring a total income of ₹49,27,400. The return was selected for scrutiny, principally to examine the computation of long-term capital gains arising from the transfer of an immovable property.

In computing the capital gains, the assessee claimed deduction towards the cost of acquisition, cost of improvement and expenditure incurred in connection with the transfer. Although the Assessing Officer accepted a substantial portion of these claims, certain components were disallowed for want of adequate supporting evidence.

The disputed items included renovation expenditure of ₹6,14,738, whose indexed cost was claimed at ₹19,48,719, and brokerage expenditure of ₹3,70,000 allegedly paid to Mudra Finserv Ltd.

Cost of Improvement Incurred Two Decades Earlier

The assessee explained that the property was in poor condition when it was acquired and that renovation and civil works were undertaken during Financial Year 2000-01 to make it usable.

According to the assessee, bills and vouchers had been obtained at the relevant time. However, because more than two decades had elapsed, those documents were no longer available. The payments had also been made largely in cash.