The Income Tax Appellate Tribunal(ITAT), Mumbai bench has held that cost of improvement and due indexation benefit on house property is deductible while computing capital gain.
The appellant, Komal GurumukhSangtani is an individual NRI and has not filed a return under section 139. The Assessing Officer reopened the assessment after the issue of notice u/s.148 of the Act alleging that she sold two residential flats jointly owned by her husband Shri Gurumukh I Sanghani. The AO denied deduction towards the cost of improvement of property and correspondingly, the indexation benefit thereon on the interest paid on the housing loan component while computing capital gains. The CIT(A) confirmed the assessment order and hence the appellant approached the ITAT.
The appellant submitted that she is merely an individual not liable for any tax audit and does not have any business income. The AO had accepted the fact that the assessee together with her husband availed housing loan from HDFC Ltd.and had also furnished the loan account details.
The appellant further submitted that without conducting some improvements the flats purchased by it would not be habitable at all. Accordingly, the aforesaid costs would form an integral part of the total amount invested for the acquisition of the house property.
The Tribunal observed that there is no bar for the assessee to incur certain expenditures for the house in cash. As long as the source for the said cash payment is explained from the disclosed income of the assessee, no fault could be attributed to the assessee.
The Coram of Mr. Vikas Awasthy, Judicial Member,and Mr. M.Balaganesh, Accountant Member has held that “we hold that assesseewould be eligible for deduction along with her husband totaling to Rs.9,68,575/- towards the cost of an improvement made in the house which has to be reduced while computing capital gains in the hands of the assessee as well as in the hands of her husband. The assessee along with her husband would also be eligible for due indexation benefit on the same”.
Mr. Rajendra Chandekar appeared on behalf of the appellant.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates
