Indexed cost of improvement under capital gains computation allowed only for substantiated renovation , with the claim restricted proportionately.

Indexed cost of improvement under section 48 was allowed only to the extent supported by the record. The property was treated as an old construction needing renovation, but the claimed expenditure said to relate to 1990-91 was found impossible to incur on the available material. Indexed cost was accepted only for expenditure attributable to 1981-82 and 1983-84, and the claim was restricted accordingly. The assessee therefore received only partial relief, with the disallowance reduced proportionately.

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Issues: (i) Whether the assessee was entitled to indexed cost of improvement while computing long-term capital gains under section 48.

Analysis: The property was treated as an old construction requiring renovation, but the claimed expenditure for 1990-91 was found impossible to incur on the available material. Indexed cost was accepted only for the expenditure relatable to 1981-82 and 1983-84, and the claim was restricted accordingly.

Conclusion: The assessee was held entitled only to partial relief on account of indexed cost of improvement, and the disallowance was reduced proportionately.

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