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Cost of improvement

lakshaytaneja (student) (25 Points)

11 June 2015

Why coi is ignored incurred before 1.4.81

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CMA Poornima Madhava (CMA) (13097 Points)
Replied 12 June 2015

Bcoz in such cases u can take market value as on 1/4/81 even though asset is purchased before that, so that would offset I think

Antara Chakravorty (Student) (21 Points)
Replied 12 June 2015

When someone comes to see the capital asset on 1.4.1981, he will find not the just the originally acquired portion, but also, the improvement. Thus, the fair market value on that date would also be after taking into consideration the improvement. So, in a way, such improvement would be included in the FMV that you would take as your cost of acquistion and you would technically not be ignoring the cost of improvement. You just would not be showing it separately.