TaxTMI 
TaxTMI 
2014 (10) TMI 977
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....f improvement of the residential premises inherited by the assessee against the long term capital gain. (b) in not allowing deduction u/s 54 of the Income Tax Act, 1961 in respect of expenses incurred on improvement of the new residential house and towards society formation charges. 3. The facts relating the case are stated in brief. In the return of income filed during the year under consideration, the assessee claimed deduction u/s 54 of the Act towards the cost of new residential property purchased by him against long term capital gain arising on sale of an old house property. On examination of the said claim, it was noticed that the assessee had held tenancy right over a property, which he had inherited from his father....
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....ms. 5. In the appeal filed before Ld CIT(A), the assessee contended that he had incurred cost on construction of authorized/unauthorized structure and hence the expenses incurred thereon should be allowed as deduction u/s 54 of the Act at the indexed rate. However, the first appellate authority also held that the assessee has received sale consideration only for surrender of tenancy right and not for surrender or sale of any house property. Accordingly he confirmed the disallowance of Rs. 29,83,021/- made by the A.O. With regard to the claim relating to the society formation charges and improvement charges made u/s 54 of the Act also, the ld. CIT(A) upehld the view taken by the A.O. Accordingly, the ld. CIT(A) dismissed the appeal filed ....
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....lding structures in 1976 also, meaning thereby, the father of the assessee was residing in that building prior to 1.4.1981 also. However, since the assessee has transferred only his tenancy right, in our view, the assessee cannot consider the cost incurred on construction of the structures as the cost of acquisition of tenancy rights. In our view, the value of tenancy right has to be determined in accordance with the practice adopted in real estate market. 9. We notice that the co-ordinate Bench of this Tribunal in the case of Meher R. Surti (supra) has considered an identical issue and has taken the view that the provisions of section 55(2)(b)(ii) of the Act shall apply in the cases where tenancy rights are inherited. The provisions of ....
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....ndexed cost thereof as deduction against capital gain. In this regard, we inclined to agree with the view taken by the ld. CIT(A) that the assessee has received compensation for surrendering the tenancy rights and not towards surrender or sale of any unauthorized or authorized structure, since we have expressed similar view in the preceding paragraph. Accordingly we are of the view that the assessee is not entitled to claim any deduction towards the expenditure incurred on construction of any authorized or any unauthorized structure. 11. The next issue relates to the disallowance of part of expenditure incurred in connection with the acquisition of new asset. According to the assessee, he has incurred a sum of Rs. 2,23,830/- towards impr....