Capital Gain Taxation: ITAT Hyderabad interesting judgement on DVO, Litigation Expenses, Cost of Improvement
The appeal (ITA No. 442/Hyd/2023) and cross-objection (C.O. No. 7/Hyd/2024) arise from the CIT(A)-NFAC order for A.Y. 2013-14.
The AO reassessed the case, adding ₹66,16,700/- as LTCG based on the DVO valuation of ₹67,34,000/- instead of the declared sale consideration of ₹45,00,000/-.
Additionally, the AO disallowed the assessee’s claim of ₹7,50,000/- as improvement cost and ₹12,00,000/- as litigation expenses while also denying exemption under Section 54F due to late deposit in CGAS.
ITAT accepted ₹45,00,000/- as the actual sale consideration, allowed ₹11,00,000/- as a genuine litigation expense, and granted ₹50,000/- on an estimated basis for unsupported legal costs.
It remanded the Section 54F issue to AO for verifying whether the CGAS deposit was utilized for purchasing or constructing a residential house within the stipulated period and also directed verification of property ownership to determine 54F eligibility.
The copy of the order is as under:
