Scrutiny case of long-term capital loss on sale of property

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : SMC-1 : NEW DELHI

BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER

ITA No.403/Del/2018
Assessment Year: 2014-15

Avtar Singh Dheeran,
C/o Kapil Goel, Advocate,
G-26/124, Sector-7,
Rohini,
New Delhi.
PAN: AAIPD8887G
(Appellant) 

Vs 

ITO,
Ward-66(5),
New Delhi.
(Respondent)

Assessee by : Shri Kapil Goel, Advocate
Revenue by : Shri Rajesh Kumar, Sr. DR

Date of Hearing : 20.04.2021
Date of Pronouncement : 10.06.2021

ORDER

This appeal filed by the assessee is directed against the order dated 16th October, 2017 of the CIT(A)-21, New Delhi, relating to assessment year 2014-15.

2. Facts of the case, in brief, are that the assessee is an individual and derives income from pension from the Ministry of Railways. He filed the return of income on 14th October, 2014 declaring the total income of Rs.1,31,638/-. The case of the assessee was selected for limited scrutiny with the reason ‘long-term capital loss on sale of property.’ During the course of assessment proceedings, the AO noted  that the assessee has sold one property bearing No.2538, Ward-XII, Punjabi Basti, Sabji Mandi, Delhi -110 007 for a consideration of Rs.83,50,000/- from which the assessee has deducted Rs.5,50,000/- as expenditure incurred on transfer and claimed capital loss of Rs.18,71,700/-. He noted that the assessee has claimed this capital loss by deducting the indexed cost of acquisition of the property at Rs.90,71,000/- based on a valuation report dated 25th August, 2014 wherein he has claimed the construction cost of ground, first and second floor. However, on perusal of the copy of the sale deed dated 25th February, 2014, he noted that only ground floor of the property was sold. He, therefore, issued a show cause notice dated 03.11.2016 asking the assessee to explain as to why the construction cost should not be restricted to ground floor only. He also asked the assessee to give proof of Rs.5,50,000/- which he claimed as expenditure on transfer.

3. It was submitted by the assessee that his father had purchased this property in 1959 from custodian of evacuee property in 1959 and to the best of his memory no construction of any type was added after 1969. Subsequently, it was stated that he had shifted to Paschim Vihar during 1984 riots and has sold the complete property from ground floor to roof and requested to consider the total construction cost of the property mentioned in valuation report. So far as the expenditure of Rs.5,50,000/- is concerned, it was submitted that this amount was spent to clear off electricity bills, water bills and domestic purchase from the locals and the major amount was spent to oblige his relatives/cousins to allow him to sell this property.

To know more in details find the attachment file