Rivulet bridge construction cost allowed as improvement expense for long term capital gains computation The ITAT Amritsar allowed the assessee's appeal regarding re-computation of long term capital gain. The tribunal held that expenditure incurred for ...
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Rivulet bridge construction cost allowed as improvement expense for long term capital gains computation
The ITAT Amritsar allowed the assessee's appeal regarding re-computation of long term capital gain. The tribunal held that expenditure incurred for constructing a concrete bridge on a rivulet in front of the shop constituted allowable cost of improvement. The CIT(A) had erroneously disallowed this expenditure, failing to appreciate that the bridge construction was capital expenditure essential for providing road access and improving accessibility to enhance footfall and capital value. The tribunal found the expenditure was supported by site plans and photographs, with no controverting evidence from revenue authorities. The addition was deleted, treating the rivulet construction cost as legitimate cost of improvement for capital gains computation.
Issues: Challenge of confirming addition of Rs. 368918/- for re-computation of long term capital gain ignoring cost of improvement of Rs. 195000/- incurred in FY 2009-10 for bridge construction.
Analysis: The appellant contested the order under section 153A r.w.s 144 of the Income Tax Act, 1961, which disallowed the benefit of Rs. 195000/- incurred on bridge construction in 2009-10. The appellant argued that the bridge was built to enhance business turnover, using borrowed funds confirmed by a sworn affidavit. The appellant stressed that the construction was a capital expenditure for improved shop accessibility. The CIT(A) upheld the addition without considering the merits. The appellant's contentions were supported by evidence and judicial precedents.
The CIT(A) overlooked that the Rs. 195000/- was spent on bridge construction to improve the shop, essential for enhanced accessibility and business growth. The source of funds was clarified as a loan, duly confirmed. The AO failed to prove the expenditure was not incurred, basing disallowance on a presumption. The appellant provided site plans and photos as proof. The High Court and ITAT rulings supported treating approach roads as part of buildings for depreciation.
Judicial precedents highlighted that capital expenditure for business improvement should not be considered revenue expenditure. The appellant's evidence, including site plans and photos, was unchallenged. The AO's disallowance based on presumption was deemed untenable. The cost of bridge construction was accepted as capital expenditure, allowing the deduction claimed by the appellant.
Considering the evidence, legal principles, and precedents, the Tribunal found the appellant's grievance genuine. Therefore, the addition of Rs. 195000/- was deleted, and the appeal by the assessee was allowed.
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