The amount spent on consumable items cannot be claimed as an improvement cost when calculating capital gain: ITAT

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The income tax appeal tribunal, Mumbai Bench, has ruled that the amount spent on consumable items including sofa, tiles, etc. cannot be claimed as improvement cost during the calculation of the amount of capital gain under the provisions of the Income Tax Act 1961.

The assessee is aggrieved by the order disallowing the cost of the improvement claimed. In this regard, it should be noted that in response to the question posed by the AO regarding the details of the improvement cost incurred by the appellant, the details of the improvement cost are submitted with the revised cost request. improvement in which, 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/- including registration fee and stamp duty as purchase cost and another amount of Rs. 74,681/- incurred for buying tiles and laying tiles as the cost of the upgrade. However, for the remaining amount of Rs.6,94,910/- no corroborating evidence was filed by the Appellant and hence the AO dismissed the claim for the cost of improvement to that extent.

Accountant Member Mr. Shemeem Yahya confirmed the order of the Inland Revenue and observed that “From the details, it is evident that the assessee is claiming the cost of the improvement, which are consumable items because of the furnishing of the sofa etc. The authorities below are correct that these items cannot be considered improvement costs for the calculation of the betterment.Relying on the High Court decision of the Honorable Delhi mentioned above is also relevant and applicable to the facts of the case.Therefore, I abide by the orders of the authorities below.

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Meeta Hasmukh Gandhi vs ITO-26(2)(2)

Counsel for the Respondent: Shri Airiju Jaikiran

CITATION: 2022 TAXSCAN (ITAT) 335

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