Case Law Details
Rajiv Ghai Vs ACIT (ITAT Delhi)
Introduction: The recent order from ITAT Delhi in the case of Rajiv Ghai vs. ACIT sheds light on the allowance of Income Tax Deduction under section 54F for a house registered in the name of the assessee’s parents. The appeal involves intricate issues related to the Cost of Improvement in properties located in Lucknow and Bangalore. Let’s delve into the detailed analysis of the case.
Detailed Analysis: The primary contention revolves around the disallowance of deductions concerning the Cost of Improvement in the Lucknow and Bangalore houses. In Lucknow, the AO disallowed the indexed cost of improvement amounting to Rs. 12,53,213 based on a valuation report. The AO raised concerns about the verifiability of expenses related to air conditioning, modular kitchen, chimney, tube-well, and submersible pump.
Regarding the Bangalore property, the assessee claimed Rs. 13,80,146 as the cost of improvement, including expenses for installing a lift. The Revenue disputed the necessity of a Pneumatic Vacuum Elevator (PVE) for the habitability of the house. The ITAT held in favor of the assessee, considering the practical need for the lift, especially given the age of the assessee’s father.
In the Revenue’s appeal, the issue of eligibility for deduction under section 54F arises. The CIT(A) concluded that the assessee, although receiving the property as a gift from parents, is eligible for the deduction. This decision was based on investments made by the assessee from his bank account for the property’s purchase, even before it was gifted.
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