2024 (7) TMI 490 - AT - Income Tax

LTCG - Disallowance of cost of improvement - HELD THAT - To claim cost of improvement, assessee has to establish that assessee had incurred expenditure for improvement of the Immovable Asset. However, the assessee failed to file any evidence to prove that the assessee had incurred expenditure for improvement of the impugned immovable asset. The Bills filed by the assessee are mainly in the name of Wings Travel Management India Private Limited, which is an independent entity. Assessee have advanced unsecured loan to Wings Travel Management India Private Limited and charged Interest. Therefore, the Bills which are in the name of Wings Travel Management India Private Limited are not the proof of expenditure incurred by the assessee for improvement of the flat owned by him. Since the assessee has failed to file the necessary documentary evidence for claiming Cost of Improvement and the AO has already allowed assessee s partial claim of Cost of Improvement, to the extent of bills which are in the name of the assessee, we uphold the disallowance made by the AO - Accordingly, grounds of appeal raised by the assessee are dismissed

Summary

Issues:
1. Appeal against the order of the Commissioner of Income Tax (Appeal) for A.Y. 2014-15 under section 250 of the Income Tax Act, 1961.
2. Disallowance of claimed Index Cost of Improvement and Interest Expenditure by the Assessing Officer.
3. Failure to provide necessary documentary evidence for claiming Cost of Improvement.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeal) for A.Y. 2014-15 under section 250 of the Income Tax Act, 1961. The appellant challenged the order on various grounds, including the consideration of submissions, disallowance of claimed amounts, and delay in filing the appeal.
2. The Assessing Officer disallowed the claimed Index Cost of Improvement and Interest Expenditure. The appellant had shown income from Long Term Capital Gain and claimed deductions for Index Cost of Acquisition and Improvement. The Assessing Officer disallowed a portion of the claimed amount, leading to the appeal.
3. The appellant failed to provide necessary documentary evidence to support the claimed Cost of Improvement. Bills submitted were mainly in the name of an independent entity, not the appellant. The Tribunal noted that the bills in the name of the entity could not be considered as proof of expenditure incurred by the appellant for improvement of the flat. The declaration provided by the entity was deemed self-serving and lacked independent evidence to support the claim.
4. The Tribunal upheld the disallowance made by the Assessing Officer for the Cost of Improvement, as the appellant failed to provide sufficient evidence. The Tribunal dismissed the appeal, stating that the Commissioner of Income Tax (Appeal) had considered the submissions, and there was no merit in the appellant's plea. The decision was pronounced in open court on 12th December 2023.