*Capital Gain Exemption allowable on Bonafide Expenses Incurred for making New House Habitable prior to Possession: ITAT

Clipped from: https://www.taxscan.in/capital-gain-exemption-allowable-on-bonafide-expenses-incurred-for-making-new-house-habitable-prior-to-possession-itat/170135/?utm_source=izooto&utm_medium=push_notifications&utm_campaign=CG


By Rasheela Basheer – On April 23, 2022 8:01 am

CapitalGain - Bonafide Expenses - ITAT-Taxscan

The Income Tax Appellate Tribunal (ITAT), Ahmedabad has held that the capital gain exemption under section 54 of the Income Tax Act, 1961 can be allowed on bonafide expenses incurred incurred for making the new house habitable prior to its possession.

The assessee, Mr. Hiren HimmatsinghRathod, had incurred the cost for making the new property inhabitable before taking over possession of the same but consideringthe provision of the act we do not find any embargo in granting relief to the assessee under Section 54 of the Income Tax Act. Bonafide expenses incurred for making the new house habitable prior to possession but before the completion of the time limit prescribed are found to be allowable. It further appears from the records available before us that the genuineness of the payment of Rs.12,00,000/- for repairing work along with Rs.2,37,650/- paid towards payment of stamp duty and Rs.48,800/- paid towards registration fees has not been doubted by the authorities below.

The Tribunal bench comprising Shri Waseem Ahmed, Accountant Member & Ms. Madhumita Roy, Judicial Member referred the judgement passed by the Coordinate Bench in the matter of Shriniwas R. Desai vs. ACIT(OSD) wherein it was held that there is no restriction on the buyer from incurring any construction expenditure on improvisation or supplementary work of ready-made unit. The additional expenses so incurred would be eligible for qualifying investment under Section 54 of the Act.

“Taking into consideration the entire aspect of the matter particularly when the assessee has incurred expenditure for making the new property habitable within the stipulated time as framed by the provision of law and particularly when such expenditure has not been doubted by the authorities below respectfully relying upon the ratio laid down by the Coordinate Bench as narrated hereinabove the assessee is found to be entitled to the exemption of Rs.14,00,000/- as the expenditure incurred. The order of addition made by the authorities below is, thus, found to be devoid of any merit and, thus, deleted. Assessee’s appeal is, therefore, allowed,” the bench said.To Read the full text of the Order CLICK HERE

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