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June 2025

Payment of consideration, pursuant to an unregistered agreement, towards interior fit out costs claimed as cost of improvement, entered into prior to receiving possession of the property held to be allowable.

By Jagdish T Punjabi, Chartered Accountant
Devendra Jain & Aditya Bhatt, Advocates
Reading Time 3 mins

16. Shivani Bhasin Sachdeva vs. Assessment Unit

ITA No. 3218/Mum./2024

A.Y.: 2021-22 Date of Order: 21 January 2025

Section : 48

Payment of consideration, pursuant to an unregistered agreement, towards interior fit out costs claimed as cost of improvement, entered into prior to receiving possession of the property held to be allowable.

FACTS

The assessee, in the return of income filed, returned capital gains on sale of immovable property for a consideration of ₹15.21 crore and while computing capital gains arising from sale thereof had claimed deduction of cost of acquisition of ₹9.96 crore and ₹2.47 crore as cost of improvement. The assessee was asked to furnish details of cost of improvement claimed in respect of the property sold along with evidences.

From the response furnished by the assessee, the Assessing Officer (AO) noticed that assessee had purchased a flat on 27.12.2017 which was booked in October 2009. On 31.5.2010, the assessee had entered into an agreement with DLF Hotel and Apartment Pvt. Ltd. to carry out improvement. The AO was of the opinion that since the property w

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