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Treatment of compensation

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This query is : Resolved

SOURAV CHATTOPADHYAY (Querist)

23 July 2014 I have a flat which has been given to tenant on rent now he is not doing vacant of my flat against he is demanding Rs 500000/- I want to sale may flat to other one. I have settle the matter and give hive Rs 300000/- by cheque as compensation now how I will treat it. is it assumed addition cost of my flat.is it right?

CA SUNIL K GARG

CA SUNIL K GARG (Expert)

23 July 2014 the amount paid to tenant is deductible expenditure u/s 48 (1)CIT Vs. Shakuntala Rajeshwar 160 ITR 840 (Delhi).
CIT Vs. A. VENKATARAMAN AND OTHERS 137ITR 846

sir, as per agreement of sale , the seller is under obligation to hand over vacant possession to the purchaser. if the property is not vacant, possession can not be handed over , which is also a precondition in sec53A of transfer of property act. however different courts has taken different view, wheather amount paid to tenant is cost of improvement or expenditure in relation to transfer
but in any case, it is alloawble in calculation of capital gain

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