| Question And Answer | |
|---|---|
| Subject: | cost of improvement in capital gains |
| Category: | Income-Tax |
| Querist: | sirivella gopal |
| Answered by: | Research Team |
| Tags: | Cost of improvements, land cost |
| Date: | March 12, 2024 |
Respected Sir,
Recently we have sold a land by dividing into small plots which is part of capital asset in partnership firm.We filed the Income Tax Returns by showing this transaction as the long term capital gain and in this long term capital gain we show the cost of improvement as the amount to equal to 30 cents of land value as the road formation expenditure for road formation. Is this type of cost of improvement is allowable under cost of improvement or not. Please clarify
One has to read the terms of the agreement . Expenditure incurred in connection with transfer of asset is allowable as deduction. In ACIT v. Ijyaraj Singh (2020) 183 ITD 237 / 207 TTJ 953 (Jaipur) (Trib.) held that development expenses incurred on land before its sale was required to put property in saleable condition would be allowable . Burden is on the assessee to prove that cost of land was used for laying road .
Thankyou sir for you reply it is very useful to me.
Thanks and regards
Sirivella Gopal
Respected Sir,
I have a bungalow that I want to self develop into a building. The cost of redevelopment will be recovered by sale of additional condominiums constructed. How should I treat this cost while computing capital gains?
Can we consider it as cost of improvement?
What is the timeline for which we need to preserve the cost of improvement bills) proofs