What constitutes cost of improvement

Tax planning 495 views 2 replies

Manish

Article

39 Points Joined May 2009

I purchased a commercial property in June 1993 for Rs. 240000. After purchasing it, i incured Rs. 200000/- on improvement(flooring, fixed structure, fixtures etc). I did not take bill of such purchase nor i recorded such improvement cost in my books.

I am planning to sell the above property. I want to know that can i claim Rs. 200000/- incured on cost of improvement even though i dont have any bills or not recorded such cost in my books of accounts.

If i take only cost of purchase my indexed cost comes to around rs. 11lacs and if i take cost of improvement as well my indexed cost comes to around rs. 17lacs.

Replies (2)

Z

Tax Consultation (US and India)

2970 Points Joined September 2011

In assessment the AO will definitely disallow it. Unless you can substantiate your claim the benefit can not be provided. Assessments are evidence based.

Even if you go in appeal then that will also be dismissed

Section 101 of The Indian Evidence Act, 1872

Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.

Manish

Article

39 Points Joined May 2009

What if i get a letter from the person who did the labour. If the letter from the labourer specifies that he took rs. 200000/- from me for the material and labour used in improving the quality of the capital asset. After getting such letter can i claim that Rs. 200000/-?