TaxTMI 
TaxTMI 
2026 (9) TMI 504
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....ture on air-conditioning installations (Rs. 11,23,369/-), built-in carpentry (Rs. 26,23,451/-), modular kitchen fittings (Rs. 5,30,099/-), home automation systems (Rs. 5,60,330/-), and other items as non-qualifying, without conducting any physical verification, enquiry, or calling for further evidence to ascertain whether such items were permanently embedded in the structure of the flats. iii. The learned CIT(A)/NFAC erred in sustaining the disallowance without appreciating that the very same cost of improvement details, including party-wise ledger accounts and bank records, were furnished and examined during the scrutiny assessment proceedings for AY 2016-17, wherein no adverse inference was drawn and the same were accepted, and in the absence of any change in facts or law, the Department cannot take an inconsistent stand in the present assessment year. iv. The learned CIT(A)/NFAC erred in placing reliance on Paville Projects P. Ltd. v. CIT [2024] 160 taxmann.com 759 (SC), which is distinguishable on facts, as the present case involves bonafide expenditure on improvement of residential flats substantiated by ledger accounts and bank records spanning multiple fina....
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....r long-term capital assets (held more than 24/36 months). The Ld. CIT(A) noted that out of the total claim of the cost of the improvement, the assessee satisfied all the three conditions in respect of the amount of Rs. 1,66,80,998/- and in respect of balance amount only condition No. (ii) and (iii) were fulfilled and the condition No. (i) was not fulfilled. He accepted the assessee's claim to the extent of Rs. 1,66,80,998/- but rejected the balance claim of Rs. 1,28,78,742/- accordingly. The list of the said items rejected is reproduced for ready reference as under: Sl. No Item Vendor Classification Notes Amount (Rs.) 1 Air-conditioning / Refrigeration work Acme Refrigeration Co. Not Allowed Portable not allowed 11,23,369 2 Home theatre / Audio setup Advance Audio Solutions Bangalore Pvt. Ltd. Not Allowed Portable not allowed 3,37,500 3 Professional services Ajmera Investment Co. Not Allowed Not related to renovation/construction. 1,96,716 4 Wall paper / Furnishings Anita Enterprises Not Allowed Always disallowed 8,27,726 5 Furniture/Furnishings Décor Anpi Home Décor....
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....0,000 28 Decor / Retail purchases Taurus Retail Pvt. Ltd Not Allowed Movable décor 1,50,000 29 Furniture accessories Vardhaman Not Allowed Movable not allowed 91,688 Total 1,28,78,742 2.3 Further, the Ld. CIT(A) relied upon the decision of the Hon'ble Supreme Court in the case of CIT v. Paville Projects (P.) Ltd., [2023] 149 taxmann.com 115 (SC), wherein it is held that assessee's claim did not qualify as capital expenditure not did they result in any enduring improvement to value of capital asset. Accordingly, he allowed the appeal of the assessee partly. 3. Aggrieved with the said finding of the Ld. CIT(A), the assessee is in appeal before the Tribunal by way of the grounds reproduced hereinabove. 4. Before us, the learned counsel for the assessee submitted that the expenditure had been incurred for making substantial improvements to the residential flat and that several of the items treated by the learned CIT(A) as movable were, in fact, permanently installed or embedded in the structure of the flat. It was submitted that air-conditioning installations, home theatre/audio systems, k....
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.... any article or thing] [or right to carry on any business 60[or profession]] 6"[or any other right] shall be taken to be nil; and (2) in relation to any other capital asset, -] (i) where the capital asset became the property of the previous owner or the assessee before the ^62[1st day of April, ^63[2001]], ^64[***] means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset on or after the said date by the previous owner or the assessee, and (ii) in any other case, means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset by the assessee after it became his property, and, where the capital asset became the property of the assessee by any of the modes specified in [sub-section (1) of] section 49, by the previous owner, but does not include any expenditure which is deductible in computing the income chargeable under the head "Interest on securities", "Income from house property", "Profits and gains of business or profession", or "Income from other sources", and the expression "improvement" shall be construed accordingly. (2) ^67[For the ....
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....ine repairs or which are not embedded in the property, definitely could not alter or improve the property which includes Pest control termite treatment (Rs. 1,63,688), Miscellaneous Expenses Rs. (6,00,400) Artwork/Paintings (1,00,000/-), Upholstery/Curtains of (Rs. 22,00,000/-), Paints/Chemicals (Rs. 36,782/-), Curtains and Soft furnishings of (Rs. 11,30,231/-), Gym equipment (Rs. 3,00,000/-), Plants /Decor accessories (Rs. 1,21,651/-), Curtains furnishing of (Rs. 43,950/-), Furniture/Furnishings (Rs. 1,81,000/-), Furniture accessories (Rs. 91,688/-) aggregating to Rs. 4,969,390/-. Such expenditure does not bring about any addition to or alteration of the residential flat and, therefore, cannot qualify as "cost of improvement" under section 55(1)(b) of the Act. The disallowance to this extent is accordingly upheld. 5.6 The other expenses incurred on 'Glass work', 'mirror works', 'kitchen equipment', bath accessories', 'wallpaper furnishing' etc. the ld counsel submitted that same goes to fix in the wall of the property of the flat, and therefore, qualify for altering the property and expenditure being in the nature of capital expenditure, qualify for deduction as a cost improvem....