Condonation of Delay and partial allowance of indexed cost of improvement granted; appeal admitted and recomputation directed.

Condonation of a 348 day delay was granted and the appeal admitted; on the substantive tax issue the tribunal, while noting absence of documentary proof for improvement expenditure, relied on the registered sale agreement confirming a constructed triple storeyed building and, in the interest of justice, exercised discretion to allow 80% of the claimed improvement cost as indexed cost of improvement. The assessing officer is directed to recompute indexed cost adopting 80% of claimed amounts. The lower authority's finding on this point is set aside and the appeal is partly allowed.

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Issues: (i) Whether delay in filing the appeal should be condoned; (ii) Whether the assessee is entitled to deduction for indexed cost of improvement claimed on sale of immovable property.

Issue (i): Whether the delay of 348 days in filing the appeal should be condoned and the appeal admitted for adjudication.

Analysis: The Tribunal examined the affidavit and reasons for delay, considered whether the delay was bonafide, whether the assessee gained by the delay, and applied justice-oriented principles and precedent guidance to assess whether condonation is warranted.

Conclusion: Delay condoned and appeal admitted.

Issue (ii): Whether the assessee is entitled to deduction for indexed cost of improvement of the property sold, where documentary proof of expenditure is not available but the registered sale agreement describes a constructed triple-storeyed building.

Analysis: The Tribunal considered the absence of detailed documentary evidence of the claimed improvement expenditure, the registered sale agreement's description confirming the existence of constructed residential building, the claimed amounts and their per square foot implication, and the deceased status of the assessee with representation by legal heir. Balancing the lack of documentary proof against the factual indication of construction and in the interest of justice, the Tribunal exercised discretion to allow a portion of the claimed improvement cost.

Conclusion: 80% of the improvement cost claimed by the assessee is to be allowed for computation of indexed cost of improvement; the Assessing Officer is directed to compute revised indexed cost adopting 80% of the claimed improvement amounts and grant the corresponding deduction. The finding of the lower authority on this point is set aside and the grounds of appeal are partly allowed.

Final Conclusion: The appeal is partly allowed by condoning the delay and granting partial relief on the claimed indexed cost of improvement, resulting in a revision of capital gains computation in favour of the assessee to the extent indicated.

Ratio Decidendi: Where documentary proof of claimed improvement expenditure is lacking but the registered sale deed establishes the existence of significant construction and equity demands relief, the Tribunal may grant a reasonable proportionate allowance of claimed improvement cost for computing indexed cost of improvement, subject to recalculation by the assessing authority.

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