Jugesh Saluja Vs DCIT (ITAT Chandigarh)
The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT), in Jugesh Saluja v. DCIT, partly allowed the assessee’s appeal and held that the indexed cost of improvement relating to an old residential property could not be rejected in entirety merely because decades-old bills and vouchers were unavailable. The Tribunal further held that deduction under Section 54 cannot be restricted solely because the new residential property is acquired jointly with a spouse, where the entire investment has been made by the assessee from her own funds.
The assessee had sold a residential property situated at Sector 33-A, Chandigarh during Assessment Year 2017-18 for a value adopted under Section 50C at ₹4,39,66,173. While computing long-term capital gains, the assessee claimed indexed cost of acquisition and improvement amounting to ₹1,03,41,977, deduction under Section 54 of ₹2,12,81,658 towards investment in a residential property at Pune, and deduction under Section 54EC of ₹50,00,000. Consequently, taxable long-term capital gains of ₹73,42,538 were declared.
During assessment proceedings, the Assessing Officer disallowed the indexed cost of improvement on the ground that the assessee had failed to furnish supporting bills and vouchers relating to improvements allegedly carried out during financial years 1985-86, 1986-87, 1996-97, and 2006-07. The Assessing Officer also restricted the deduction under Section 54 to 50% of the claim because the new residential property at Pune had been purchased jointly in the names of the assessee and her husband. Further, GST, infrastructure charges, utility charges, cluster fund contributions, club charges, and other incidental expenses were excluded while computing the eligible cost of the new property. The assessment was completed after making additions aggregating to ₹2,27,57,185. The Commissioner of Income Tax (Appeals) upheld these disallowances.
