Components of selling cost of house property forcapital gain

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Nagappa B Nesur (Querist)
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22 January 2016 Dear Sirs,
I have had a house property which is sold couple of days back. I understand that there is a provision to claim deduction of selling expense from sale consideration. I have spent on advertisements, Travel & Accommodation and telephones etc over last 7 to 8 years for the purpose of sale and these are exclusively for selling the property. But finally sold in this year.

Now, pl clarify and advise with your expertise whether these can be treated as selling cost and claim deduction from Sale consideration while computing capital gain.

With warm regards.

Nagappa B Nesur.

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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23 January 2016 The expression “expenditure incurred wholly and exclusively in connection with such transfer” u/s 48 has not specified or illustrated any where in the Act. However, in my view, the expenditure incurred which is necessary to complete the transfer will be qualified for deduction from "full value of consideration".

Examples of such expenses are brokerage or commission paid for securing a purchaser, cost of stamp, registration fees in case the same was borne by the vendor, traveling expenses incurred in connection with transfer, litigation expenditure for claiming enhancement of compensation awarded in the case of compulsory acquisition of assets.

One should also keep in view the following propositions:
- claim should not be a vague;
- It is not an essential expenditure to transfer the title.

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CA. SHIVA SHANKARA R. SHETTY

CA. SHIVA SHANKARA R. SHETTY (Expert)
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24 January 2016 You can deduct the 'selling expenditure' from the 'sale consideration'. However, the term 'selling expenditure' no where defined in the income tax act. So, any expenditure in relation to the sale of the property can be deduct from the sale value.

The selling expenditure may be includes brokerage paid, advertisement exp, Travelling exp, etc.

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