#cost of acquisition

The ITAT Bangalore has ruled that when an assessee provides credible documentary proof of actual payment - such as society certificates and payment receipts - the lower sale deed value cannot be used to compute capital gains. This sets a critical precedent for property buyers in cooperative housing societies, ensuring tax liability reflects true economic cost, not artificially understated deed values.

The ITAT Delhi has ruled that payments made to tenants for vacating a property before sale can be claimed as part of the cost of acquisition under Section 48 of the Income Tax Act, provided they are substantiated by contemporaneous bank records-even without a registered surrender deed. This clarifies a critical path for property sellers to reduce taxable capital gains, especially in high-value urban real estate transactions where tenant rights complicate clear title transfer.

The ITAT Jabalpur ruled that when land is partially sold after conversion, the cost of acquisition for long-term capital gains must be calculated on the entire original parcel, not just the portion sold. This prevents artificial inflation of gains and ensures fair valuation under Section 50C, directly impacting landowners and developers who subdivide and sell plots.

ITAT Delhi rules that for capital gains tax on under-construction properties, indexation of the cost of acquisition must commence from the financial year of allotment and payment, not the registration date. The tribunal also permitted brokerage deduction upon submission of bank transaction evidence, clarifying tax computation for real estate investments.