Dilip Kumar Gupta Vs DCIT (ITAT Hyderabad)
The Income Tax Appellate Tribunal (ITAT), Hyderabad, allowed the assessee’s appeal for statistical purposes, holding that there is no restriction under Section 50C of the Income Tax Act on claiming the indexed cost of improvement while computing long-term capital gains (LTCG) based on the deemed sale consideration. However, it remanded the matter to the Assessing Officer (AO) for the limited purpose of verifying the quantum of the indexed cost of improvement claimed by the assessee.
The assessee had sold an immovable property during Assessment Year 2012-13. Based on the difference between the actual sale consideration and the stamp duty value, the AO reopened the assessment under Section 147 and invoked Section 50C by substituting the sale consideration with the higher value adopted by the Sub-Registrar. In the return filed in response to the notice under Section 148, the assessee computed capital gains after adopting the deemed sale consideration and claimed deduction for the indexed cost of acquisition as well as the indexed cost of improvement representing expenditure incurred on construction of the building.
The AO disallowed the indexed cost of improvement of ₹11,39,746 on the ground that such deduction was not permissible under Section 50C. The Commissioner of Income Tax (Appeals) affirmed the disallowance. Before the Tribunal, the assessee also sought condonation of a delay of 63 days in filing the appeal, explaining that the delay occurred due to illness, supported by a medical certificate. The Tribunal condoned the delay, observing that it resulted from ill-health rather than negligence and referred to the Supreme Court’s decision advocating a liberal approach in condoning delays.
