The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has allowed the deduction as to cost of improvement under Section 48(ii) of Income Tax Act as the deduction has been claimed by mistake against the other property which was otherwise considerable.
The assessee, Dappled Paper Industries Pvt. Ltd. had filed a return which was processed under Section 143(1) of the Income Tax Act, however, the case of assessee was reopened under Section 147 of the Income Tax Act on the basis of information regarding sale of immovable property. The assessee was served notice under Section 148 of the Income Tax Act to which the assessee responded and filed objections to reopening which were disposed of and subsequently, AO made the addition.
The disallowance had been made by the AO for the reason that this expenditure pertains to different property Noida and not the property against which expenditure had been claimed. Revenue did not dispute that this expenditure was allowable deduction as cost of improvement under Section 48(ii) of the Income Tax Act. The copy of the evidence of payment of transfer/extension charges were placed and the same had been debited in the assessee bank account. The assessee had claimed this deduction by mistake against the other property.
Suresh Gupta, appeared on behalf of the assessee and Sanjay Kumar appeared on behalf of the revenue.
The two-member Bench of Shamim Yahya, (Accountant Member) and Anubhav Sharma, (Judicial Member) observed that as the assessing officer was making reassessment under Section 147 of the Income Tax Act, he was not justified in making the disallowance as the above expenditure was otherwise considerable as such for computation of deduction of short term capital gain for the property for which too assessee had reported the STCG.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
