TaxTMI 
TaxTMI 
2026 (9) TMI 1967
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....eding u/s 143(3) of the Income Tax Act [hereinafter referred as "the Act"]. 2. The brief facts of the case are that the assessee had filed his original return of income for A. Y. 2013-14 on 27.09.2013 declaring total income of Rs. 1,59,00,665/-. Thereafter, a revised return was filed on 13.02.2014 and again on 24.02.2014 declaring income of Rs. 1,33,69,028/-. The case of the assessee was selected for scrutiny and a notice u/s. 143(2) of the Act was issued on 09.09.2014. In the course of assessment, the AO noticed that the assessee, as a co-owner, had sold an immovable property during the year in the form of land, the proportionate sale consideration of which was Rs. 2,72,44,300/-. In the original return, the assessee had disclosed LTCG o....
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....e Ld. CIT(A) had allowed 1/10th of the claim, as the assessee was only 1/10th co-owner of the property sold. 4. Now, the assessee in second appeal before us. The following grounds have been taken in this appeal: 1.1 1.1 The order passed u/s. 250 on 19.08.2025 for A.Y. 2013-14 by NFAC.CIT(A) Delhi (for short CIT(A)] upholding the disallowance of cost of improvement to the extent of Rs. 1,25,27,212/- is wholly illegal, unlawful and against the principles of natural justice. 1.2 The ld. CIT(A), has grievously erred in law and or on facts in not appreciating that the cost of improvement was incurred solely by the appellant and no claim was made by the co-owners as stated by AO and therefore, the CIT(A) ought not to have res....
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.... that since the entire expenditure was incurred by the assessee, the Ld. CIT(A) was not correct in restricting the claim only to the extent of 1/10th of expense, in proportionate to his ownership right in the property sold. 6. Per contra, Shri Amit Pratap Singh, the Ld. Sr. DR submitted that the fact that the improvement expense claimed by the assessee was in respect of the entire piece of land and not in respect of the proportionate share of land owned by the assessee, is not under dispute. According to the assessee, he had claimed entire expense as per understanding with the other co-owners and no other co-owner had claimed any cost of improvement. The Ld. Sr-DR submitted that since the improvement expenses was for the entire piece of ....
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....y had not complied to the notices issued by the AO. The inquiry conducted by the Inspector had revealed that those parties were not in existence at the given address. None of the other co-owners had claimed any such deduction towards cost of improvement. Therefore, the AO had disallowed the entire improvement expense of Rs. 1,39,19,124/-. The Ld. CIT(A), on the other hand, had allowed 1/10th of development expense considering the fact that the assessee was having 1/10th ownership of the property sold. 8. We find that there are two distinct aspects which require consideration. The first is whether the expenditure of Rs. 1,39,19,124/- was actually incurred by the assessee and constituted cost of improvement within the meaning of the provis....
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.... capital asset transferred by the assessee. 10. The assessee has admittedly transferred only his proportionate interest in the property. The improvement, as stated by the assessee himself, was to the entire property. Therefore, the benefit of such improvement was attached to the property as a whole and not exclusively to the assessee's proportionate interest therein. In the absence of any material demonstrating that, under a legally enforceable arrangement, the assessee alone was entitled to appropriate the entire cost of improvement against the consideration received by him on transfer of his share, the entire expenditure cannot automatically be treated as cost of improvement of the assessee's proportionate interest. We, therefo....