Indexed cost of acquisition computation

A Captial Asset being a Commercial Shop was Gifted by Elder Brother to Younger Brother by way of Gift Deed in F.Y.2005-06. The same property was purchased by Elder Brother in F.Y.1998-99 from outside party. Let us assume that the cost of Acqusition to the Elder Brother was Rs.2,00,000/- in financial year 1998-99 & there after certain expenditure incurred in relation renovations & alterations etc in different years approx. to  Rs.1,00,000/-

Now the query is whether both Cost of Acqusitions can be indexed based on the Year of Purchase/Renovations & the same can be reduced from Sale Consderation Of Rs.15,00,000/- in the year of Sale i.e. 2010-11 or not in the hand of Younger Brother who sold the property in year 2010-11 so far computation of Long term Captial Gain is concerned under I.T.Act.

Replies (2)

The Indexation will  be allowed on the purchase price initially beared by the elder brother + amount spend by younger brother on renovation after receiving the gift

amount spend by elder brother on renovations will not be allowed as a deduction

   

Originally posted by : neelesh

The Indexation will  be allowed on the purchase price initially beared by the elder brother + amount spend by younger brother on renovation after receiving the gift

amount spend by elder brother on renovations will not be allowed as a deduction

   

Mr. Neelesh

Kindly Refer to Section 55(1)(b) of I. Tax Act.

COI includes the Capital Expenditure incurred by the assessee as well as Previous Owner

hence amount spend by elder brother on renovations is COI if it is capital Expenditure and will be allowed as a deduction after indexation

 

As far as Period for indexation is concerned 

For COA  - from A Y 1999-2000 upto A Y 2011-12

For COI - From A Y relevant to the P Y in which COI is incurred upto A Y 2011-12

 

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