Can we claim cost of improvement on land

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.).

Yes. Capitalise the same and it will be allowed at the time of transfer as Cost of Improvement.

 

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