Assessee fails to prove cost of improvement claims for LTCG computation without adequate evidence

The ITAT Pune dismissed the assessee's appeal challenging disallowance of cost of improvement claims for LTCG computation. The tribunal held that to claim cost of improvement, the assessee must establish actual expenditure incurred for improving the immovable asset. The assessee failed to provide adequate evidence, as most bills were in the name of Wings Travel Management India Private Limited, an independent entity to whom the assessee had advanced unsecured loans. Since bills in another entity's name cannot prove the assessee's expenditure for property improvement, the AO's partial disallowance was upheld.

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Issues:
1. Appeal against the order of the Commissioner of Income Tax (Appeal) for A.Y. 2014-15 under section 250 of the Income Tax Act, 1961.
2. Disallowance of claimed Index Cost of Improvement and Interest Expenditure by the Assessing Officer.
3. Failure to provide necessary documentary evidence for claiming Cost of Improvement.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeal) for A.Y. 2014-15 under section 250 of the Income Tax Act, 1961. The appellant challenged the order on various grounds, including the consideration of submissions, disallowance of claimed amounts, and delay in filing the appeal.
2. The Assessing Officer disallowed the claimed Index Cost of Improvement and Interest Expenditure. The appellant had shown income from Long Term Capital Gain and claimed deductions for Index Cost of Acquisition and Improvement. The Assessing Officer disallowed a portion of the claimed amount, leading to the appeal.
3. The appellant failed to provide necessary documentary evidence to support the claimed Cost of Improvement. Bills submitted were mainly in the name of an independent entity, not the appellant. The Tribunal noted that the bills in the name of the entity could not be considered as proof of expenditure incurred by the appellant for improvement of the flat. The declaration provided by the entity was deemed self-serving and lacked independent evidence to support the claim.
4. The Tribunal upheld the disallowance made by the Assessing Officer for the Cost of Improvement, as the appellant failed to provide sufficient evidence. The Tribunal dismissed the appeal, stating that the Commissioner of Income Tax (Appeal) had considered the submissions, and there was no merit in the appellant's plea. The decision was pronounced in open court on 12th December 2023.

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