Capital Gains

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Gaurav (Querist)
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06 December 2007 Suppose , a man takes takes a loan from the outsider for the trading of shares, they agreed on the following terms....

monthly installment as a repayment of the principal amount i.e., fixed.
And he agreed that he will share only 10% of the only profit and not the loss made by the other as a commission not the interest.
Is this commission will be allowable expense under the capital gains or not....??????

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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07 December 2007 As long as an expenditure is incurred wholly in connection with the transaction, it is allowable. Do not complicate this with share of profits etc. You can enter into payment of commission on the basis only if you make profit, without calling it as share of profit.

CA. RAMESH KUMAR

CA. RAMESH KUMAR (Expert)
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07 December 2007 As per Section 48(i) expenses incurred wholly and exclusively in connection with the transfer are allowed as deduction from the full value of consideration.
So in ur case the commission paid for the money used for share trading will be allowed as deduction for computing capital gains.

kartik_somu

kartik_somu (Expert)
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19 March 2008 yes, it should be allowed as a deduction as but for this expenditure the income would not have arisen.

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