Property seller cancels contract - capital gain
A property seller cancels a contract of sale and has to pay additional money to the buyer for cancellation. Will this payment be included in the cost of acquisition/ improvement for Capital Gains purpose?
Replies (2)
If the property seller was assessed under business income from sale of properties then he can claim entire compensation as revenue expenditure. However, if such property was a capital asset then this compensation shall be treated as cost of improvement, being a capital expenditure.
The case is that of the house being a capital asset. Can you share some legal precedents in support of your view? Thanks!
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