Capital gain cost of improve

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An individual purchased a property vide a sale deed duly registered. Society is yet to be formed. The builder asked for 1 lac as life-time maintenance. The home-buyer will pay this 1 lac and he will never have to pay any regular maintenance bill. Can this amount be treated as cost of improvement while computing LTCG when he sells this property?

 

Thanks.

Replies (3)
maintainence expenses are recurring in nature normally, but in this case benefits of this one time payment will be derived for long future periods and thus according to me it should be allowed to be indexed as cost of improvement at time of sale of property.

Hi,

As per Sec 55- COI should be :-

  1. Capital in nature.
  2. Incurred in making any addition / alteration to capital asset.

Maintenance is not a capital expenditure even if it is paid in lumpsum.

Secondly it cannot be construed that this expenditure is incurred for addition / alteration to capital asset.

 

Hence as per AJH reading this should not be included as cost of improvement. 

*Subject to any recent case law.

For any further query PM or mail me.

AJH & CO.

anubhavjain @ ajhco.in

Thanks T. A Singh and Anubhav for your reply.

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