Jugesh Saluja Vs DCIT (ITAT Chandigarh)
In the case before the Income Tax Appellate Tribunal Chandigarh, the assessee challenged disallowance of indexed cost of improvement and restriction of deduction under Section 54 arising from sale of a residential property at Chandigarh. The Assessing Officer had rejected the indexed cost of improvement claim due to absence of old bills and vouchers and restricted Section 54 deduction to 50% because the new residential property at Pune was jointly purchased in the names of the assessee and her husband. The Tribunal observed that the existence of a 3300 sq. ft. residential structure was clearly established through the registered sale deed and valuation adopted by the stamp authority, and therefore the claim for construction and improvement expenses could not be rejected entirely merely because decades-old vouchers were unavailable. The Tribunal directed recomputation of indexed cost using applicable PWD rates. On Section 54 deduction, the Tribunal held that since the entire investment in the new property was made from the assessee’s own funds, deduction could not be restricted merely because the husband was included as a joint holder. However, optional club membership charges were held ineligible for deduction.
Facts: The assessee sold a residential house property at Chandigarh and while computing long-term capital gains claimed indexed cost of acquisition/improvement aggregating to Rs. 1.03 crore in respect of construction and renovations carried out over different years. The assessee also claimed deduction under section 54 amounting to Rs. 2.12 crore on investment in a new residential property at Pune jointly acquired with her husband. The AO disallowed the indexed cost of improvement on the ground that old bills and vouchers relating to construction and improvements were not produced. Further, deduction under section 54 was restricted to 50% by treating the new property as jointly owned, and several incidental charges such as GST, infrastructure charges, utility charges and other allied payments were excluded from eligible cost.
