Indexed cost and section 54 relief cannot be denied merely for missing vouchers or joint property names.

Indexed cost of improvement cannot be rejected outright merely because decades-old bills and vouchers are unavailable where the record otherwise shows an existing constructed superstructure, the acquisition and improvement chronology, and stamp valuation of the built portion; the cost must be recomputed on a reasonable basis, including constructed area and applicable PWD rates. Section 54 relief cannot be curtailed simply because the new residential property is held in joint names when the assessee funded the investment from own funds. Acquisition-linked payments such as premium, GST, stamp duty, registration and infrastructure charges form part of eligible investment, while optional club membership charges are excluded.

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Issues: (i) whether the assessee's claim for indexed cost of improvement could be rejected merely for want of old bills and vouchers, and (ii) whether deduction under section 54 could be restricted because the new residential property stood in joint names and because certain charges were excluded from the eligible investment.

Issue (i): whether the assessee's claim for indexed cost of improvement could be rejected merely for want of old bills and vouchers

Analysis: The sale deed of the original property recorded the existence of a substantial constructed residential superstructure and the stamp authority had also valued the constructed portion. The chronology of acquisition, construction, and subsequent improvements was supported by the material on record. In such circumstances, the absence of decades-old bills and vouchers could not justify complete rejection of the claim. Where construction and improvement are otherwise demonstrated, the cost cannot be disallowed in entirety without a proper recomputation on a reasonable basis.

Conclusion: The disallowance of indexed cost of improvement was not sustained and the matter was directed to be recomputed on the basis of the constructed area and applicable PWD rates. This issue was decided in favour of the assessee.

Issue (ii): whether deduction under section 54 could be restricted because the new residential property stood in joint names and because certain charges were excluded from the eligible investment

Analysis: The entire investment in the new residential unit was found to have been made from the assessee's own funds. Deduction under section 54 could not be curtailed merely because the lease agreement mentioned the spouse as a joint holder, since the source of investment and the real nature of the transaction were material. Payments directly connected with acquisition of leasehold rights, including premium, GST, stamp duty, registration charges, utility and infrastructure-related charges, were treated as part of the eligible cost. Optional club charges were held not to be intrinsically linked with acquisition and were excluded.

Conclusion: The restriction of deduction under section 54 on account of joint names was deleted, while club membership charges and related taxes were excluded from the eligible investment. This issue was decided substantially in favour of the assessee.

Final Conclusion: The appeal succeeded to the extent that the assessee obtained relief on both the capital cost and the section 54 claim, with only optional club-related expenditure kept outside the eligible deduction.

Ratio Decidendi: A claim for capital-gains deduction cannot be denied merely for absence of old vouchers where construction and improvement are otherwise established, and exemption under section 54 depends on the assessee's actual investment and the nexus of the expenditure with acquisition, not merely on the presence of a joint name in title documents.

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