ITO Vs Neelam Shamsher Kashyap (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai heard the Revenue’s appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]/National Faceless Appeal Centre (NFAC), Delhi, dated 30 January 2025, for Assessment Year 2021–22. The case concerned the claim of deduction under Section 54 of the Income Tax Act, 1961, and the determination of the cost of acquisition of a property as of 1 April 2001. The Assessing Officer (AO) had restricted the deduction under Section 54 to 50%, citing joint ownership of the new property between the assessee and her son-in-law and had also substituted the fair market value (FMV) adopted by the assessee with the ready reckoner value.
The assessee, an individual, had filed a return declaring total income of ₹89,08,020 and claimed a Section 54 deduction of ₹4,00,84,000 against long-term capital gains (LTCG) arising from the sale of two properties. The AO noted that the new property was purchased jointly with the assessee’s son-in-law, who contributed ₹50,00,000 toward the purchase, while the assessee contributed ₹3,67,94,500. Despite accepting that the assessee paid the majority of the purchase consideration, the AO allowed only 50% of the claimed deduction on the assumption of equal ownership. The AO also computed the cost of acquisition as of 1 April 2001 using the ready reckoner rate of ₹5,078 per sq. ft., rejecting the valuation report of the government-registered valuer submitted by the assessee.
