Hi,
My Client had acquired one Residential Property for Rs. 9 Lakhs in the Year 1986 in joint name of himself and his mother. Over the years the client took loan from a bank against the property for his bussiness which amounted to Rs. 4 Crores.
During the year 2012 the Client Loan became NPA with the Bank and the Client approached the Bank for OTS. Now the bank has accepted the OTS of Rs. 2.9 Crores for the client which is to be paid in the by March 2015.
My client wants to now transfer the rights of properties in his and his mothers name in the name of his son Sayy - Mr. X by way of Gift Deed. Mr. X will now arrange a buyer for the flat and will repay the Settlement Proceeds to the Bank from Sale Consideration of the Property.
In this case my Query is that whether Mr. X will allowed repayment of Loan amount as an expenditure or will it be added to his cost of Acquisition. i.e. whether Rs. 2.9 Crores will be allowed as an expense to Mr. X since he discharged the loans for property received as gift to clear the title of the property?
CAclubindia
