indexation

Mr. Girish Ahuja wants the cost of improvement to be indexed taking 95-96 as the base year....is this treatment correct?

For Cost of improvement base year is to be taken as the year in which cost was actually incurred...

What is Indexed Cost of Improvement?

Indexed cost of Improvement is calculated as under: -

it will help you.... 

Cost of Improvement should be calculated by taking base as in the year in which imrovement expenditure was incurred i.e 1995-96.

And computation will be

                                                                                               Rs. 20 Lacs

                       Less: Indexed cost of acquisition

                                (i.e Rs. 10 Lacs* CII of 2009-10)/CII of 1990-91

                                i.e Rs. 10 Lacs*582/182

                     Less:   Indexed cost of Improvement

                               (i.e Actual cost of Improvement*CII of 2009-10)/CII of 1995-96

                                i.e Rs 5 lacs*582/281.

 Rs. 20 lacs i.e sale value  will exceed the indexed cost of acquisition & Improvement.

Hence it would be LTC Loss.

well...1st of all CII of 2009-10 is 632 nd the indexing of initial cost is done taking base year of 1999-00 in which mr. X got the property as a gift

Treatmaent done by Dr. Girish Ahuja is Correct...Because for improvement Base yr is always the yr in which Exp. has incurred...

Indexed cost of Improvement

  i.e Actual cost of Improvement*CII of 2009-10)/CII of 1995-96

  i.e Rs 5 lacs*632/281.


 

Agree with shrikant kalyani.....

INDEXED COST OF IMPROVEMENT = ACTUAL COI * CII OF 2009-10 / CII OF 1995-96....