ITAT grants deductions for vacating premises, rectifies disallowed expenditure, and adjusts property valuation for capital gains.

The ITAT allowed all appeals in favor of the assessee. It granted deductions for amounts paid to brothers for vacating premises while computing capital gains, rectified the disallowed expenditure claimed for property improvement, and adjusted the indexed cost of acquisition based on the correct property valuation.

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Issues:
- Deduction of amounts paid to brothers for vacating premises while computing capital gains
- Disallowance of expenditure claimed for property improvement
- Indexed cost of acquisition discrepancy

Issue 1: Deduction of amounts paid to brothers for vacating premises while computing capital gains

The appeal concerned whether the assessee was entitled to deductions for amounts paid to brothers to vacate premises while calculating capital gains from the sale of a house-property. The AO and CIT(A) had declined the deductions citing various reasons, including occupancy details and property distribution. However, the ITAT examined the evidence, emphasizing the social circumstances and brotherly relationship. It noted the payments were made for improving the property's title and granted the deductions. The ITAT allowed the appeals, directing the AO to permit the deductions for both assessees.

Issue 2: Disallowance of expenditure claimed for property improvement

In one appeal, the assessee contested the disallowance of claimed expenditure for property improvement. The CIT(A) had allowed a lower amount than claimed, which the ITAT deemed an apparent error. The ITAT rectified this, directing the AO to grant the full deduction of the actual expenditure incurred by the assessee for property improvement.

Issue 3: Indexed cost of acquisition discrepancy

Another ground of appeal involved the indexed cost of acquisition discrepancy. The assessee disputed the AO's valuation of the property as on 1.4.1981, arguing for a higher value based on a valuer's report. The AO and CIT(A) had not fully considered the valuation aspects presented. The ITAT carefully analyzed the valuation report, highlighting the property details and the valuation methodology. It directed the AO to adopt the higher valuation figure provided by the assessee, instructing the computation of long term capital gains accordingly.

In conclusion, the ITAT allowed all appeals in favor of the assessee, granting deductions for amounts paid to brothers, rectifying the claimed expenditure for property improvement, and adjusting the indexed cost of acquisition based on the correct property valuation. The judgments were pronounced on 1st August 2016 at Ahmedabad.

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