ITAT rules on computing capital gain

ITAT rules on computing capital gain

The assessee felt wronged for not being allowed to claim an amount spent on furnishings

The Mumbai Branch of the Income Tax Appellate Tribunal has held that the amount spent on consumable items including sofa and tiles cannot be claimed as a cost of improvement while calculating the amount of capital gain under the provisions of the Income Tax Act, 1961.

The assessee was aggrieved because of the order that rejected the cost of the improvement. The assessing officer (AO) had reduced the cost from Rs.19,83,181 to Rs.10,87,891 and allowed a claim of Rs.3,18,300 comprising of registration fee and stamp duty as purchase cost and an amount of Rs.74,681 incurred for the purchase of tiles and laying of tiles as cost of the improvement.

However, regarding the remaining amount of Rs.6,94,910, no corroborative evidence was filed by the appellant. Therefore, the cost of the improvement was declined by the AO.

The bench of Accountant Member Shemeem Yahya upheld the order of the Income Tax department. It observed, "It is evident that the assessee is claiming the cost of improvement, which are consumable items on account of furnishings. The authorities are correct that these items cannot be considered as the cost of improvement for the computation of capital gain."

Furthermore, relying on the Delhi High Court judgment in a previous case, he said, "It is germane and applies to the facts of this case. Hence, I uphold the orders of the authorities."