Dilip Mohandas Devani vs. Income Tax Officer

Parties Involved

Facts Summary

The assessee, Shri Dilip Mohandas Devani, had sold an immovable property on 16.01.2012. The sale deed showed the total consideration for the property at ₹41,00,151/-, which had been shared equally among five co-owners, including the assessee and his minor daughter. The Assessing Officer observed that the stamp duty paid on the transaction showed a higher stamp duty valuation of ₹67,14,284/- with respect to this property. The assessee had not filed his return of income for A.Y. 2012–13. Accordingly, reassessment proceedings were initiated under section 147 of the Act. The assessee filed return of income on 27.05.2019 declaring total income of ₹1,690/- and claiming a long-term capital loss of ₹8,70,727/- after taking into account indexed cost of acquisition, cost of improvement, and after claiming exemption under section 54 of the Act. The Assessing Officer disallowed the assessee’s claim of ₹6,00,000/- towards cost of improvement and restricted the deduction under Section 54 to 50% of the investment in the new residential property. The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals).…

Legal Issues

• 1. Disallowance of Indexed Cost of Improvement
• 2. Incorrect restriction of Deduction under Section 54

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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