The Income Tax Appellate Tribunal, Mumbai Bench has held that the amount spent on consumable items including sofa, tiles, etc., cannot be claimed as cost of improvement while calculating the amount of capital gain under the provisions of the Income Tax Act, 1961.
The assessee is aggrieved with the order rejecting the cost of improvement claimed. In this regard, it is noted that in response to the query made by the AO about the details of the cost of improvement incurred by the appellant, the details of the cost of improvement are submitted along with the revised claim of cost of improvement wherein, the cost of the improvement is reduced from Rs.19,83,181/- to Rs.10,87,891/-. Against the revised claim of Rs.10,87,891/- the AO had allowed a claim of Rs.3,18,300/- comprising of registration fee and stamp duty as purchase cost and another amount of Rs.74,681/- incurred for the purchase of tiles and laying of tiles as cost of the improvement. However, for the remaining amount of Rs.6,94,910/- no corroborative evidence was filed by the appellant and therefore the AO disallowed the claim of cost of improvement to that extent.
Accountant Member Mr. Shemeem Yahya upheld the order of the Revenue and observed that “from the details, it is evident that assessee is claiming the cost of improvement, which are consumable items on account of furnishing sofa, etc. The authorities below are correct that these items cannot be considered as the cost of improvement for the computation of capital gain. The reliance on the Hon’ble Delhi High Court decision referred above is also germane and applies to the facts of the case. Hence, I uphold the orders of the authorities below.”
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