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Can we claim cost of improvement on land

CA Neeraj Bansal (Profession) (191 Points)

04 March 2014

Hello,

Can we claim deduction as cost of improvement( As the 2-3 feet soil is put on the earth using tractors) on land while selling the plot of land .???

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CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 04 March 2014

Yes it is to be deducted while computing CG. Expenses must have actually been incurred - Only those expenses which have been actually incurred by the assessee in making additions and improvements in the property ought to be taken into consideration as ‘cost of improvement’ while computing capital gains under section 55(1)(b) of the Act - Shri Parmanand Bhai Patel & Smt. Jyotsna Devi Patel v. CIT [1984] 149 ITR 80 (MP). Betterment charges are allowable - The expenditure in the shape of betterment charges paid under the town planning scheme for acquiring an enduring benefit are in the nature of capital expenditure and go to improve the value of the land, hence, they would fall under section 48(ii) - Mathurdas Mangaldas Parekh v. CIT [1980] 126 ITR 669 (Guj.).