2024 (2) TMI 40 - AT - Income Tax

Deduction / Exemption u/s 54 - LTCG - expenditure incurred on interiors of new residential house property - HELD THAT - We note from the bank statement submitted by the assessee that the assessee has paid amount on 25/03/2013 of Rs.54,65,641/- vide cheque No.363832, out of which, Rs.46,00,000/- was given as advance for purchase of the property and the second party with the permission of the vendor, Shri Sanjay Udani has carried out lot of interior decorations in the schedule B property spending substantial amount of Rs.8,65,641/- and it has been brought into the notice of the first party who was convinced about the interior decoration. The payment made by the assessee has not been disputed by any of the lower authorities and payment was made to her husband and both are residing together. Assessee supports the case of the assessee. Accordingly, the expenditure incurred by the assessee for interior decoration is eligible to get the benefit of deduction u/s 54.

Summary

Issues Involved:
Appeal against disallowance of exemption under section 54 for expenditure on interiors of new residential house property.

Summary:

Issue 1: Disallowance of Exemption under Section 54 for Interior Expenditure

The assessee filed an appeal against the order disallowing exemption under section 54 for expenditure on interiors of a new residential house property. The assessee claimed exemption based on the amount spent on interior decoration, but the assessing officer disallowed a portion of the claim. The CIT(A) also dismissed the appeal, stating that the agreement and evidence provided were not genuine or sufficient to substantiate the claimed expenditure. The ITAT heard arguments from both sides, with the assessee's representative emphasizing that the expenditure was incurred by the assessee's husband for making the house habitable, and supporting the claim with relevant agreements and case laws. The departmental representative, on the other hand, argued that the evidence presented was insufficient to prove the genuineness of the expenditure. After considering the submissions, the ITAT noted that the dispute centered on interior decoration expenses of Rs.8,65,641 and found that the evidence presented, including bank statements and agreements, supported the assessee's claim. The ITAT concluded that the expenditure incurred for interior decoration was eligible for deduction under section 54 of the Income Tax Act, thereby partly allowing the appeal. Other grounds raised by the assessee were dismissed as not pressed.

Separate Judgment:
No separate judgment was delivered by the judges in this case.

Order pronounced in court on 30th day of January, 2024.