INCOME TAX ACT, 1961

Section 49

Capital gains - Cost of improvement - Assessee had not been able to establish any kind of further construction/improvement being done subsequent to the purchase of the land - Valuation report relied upon by assessee not laid before AO

Assessee sold urban industrial property and declared long-term capital gain after allowing for indexed cost of purchase and improvements to the property sold. AO denied assessee claim of cost of improvement stating that he did not furnish any proof to substantiate cost of improvement on the property sold. Assessee referred to valuation report by SPR Associates, mentioning construction of 500 sq.ft building with AC sheet was constructed during 2005-06.Held: Assessee purchased original asset under consideration on 19-3-1999. Agreement recitals revealable that there existed certain building and erections at the time of purchase by assessee. Assessee had not been able to establish any kind of further construction/improvement being done subsequent to the purchase of the land. Assessee had not been able to establish the balance amount being utilised for any other construction or any improvements carried out by assessee on the existing buildings. Tribunal was therefore unable to appreciate the quantification made out by assessee to the extent of Rs. 1,41,77,065. Also there was nothing on record to establish that various valuation reports referred to and relied upon by assessee had been laid before AO. Therefore, in the interest of justice, AO was directed to verify the reports and to consider cost of improvement/construction in accordance with law.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 54G

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