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TMI BlogDedcution of cost of acquisition and cost of improvementX X X X Extracts X X X X X X X X Extracts X X X X ..... Natural improvemtn in quality of land- by conversion of rural land into urban land, agricultural land into non-agricultural land,development in locality etc. takes place without any cost of improvement incurred by assessee. When ther is no cost of improvement or it is not computed and when the date of improvement is also not ascertainable, the gain on transfer of such asset may not at all be taxab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. This is becasue cost of acquisition and cost of improvement bothe are necessary to be deducted from sale value, otehrwise there will be no profit or gain in context of S. 45 read with S.48. Readers may refer to judgments in case of B.C.Sriniwas Setty 128 ITR 294(SC), Home Industries (BBY),Evans Fraser (BBY), Octovious Steel ITR (Cal), Suman Tea and Plywood (Cal),and other cases on the point of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computation of capital gain and send feed back. Article on this website on this issue can also be referred to. - Reply By Rama Krishana - The Reply = In the issue you have considered only one occasion of conversion of agriculture land into non-agricultural land without incurring any cost to it. I wish to extend this scope to an urban land which was ignored earlier but due to certain development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in nearby areas, the price of that urban land shoot up. Now the question arises as you have raised in the query is that, whether at any point of time at which the price increase abnormally should be take the factor which has contributed in unexpected increase as a cost of improvement? The case laws referred by you are itself appears to be old belong to the situation before various amendments in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions for an example the "cost of goodwill" earned by the seller. - Reply By DEV KUMAR KOTHARI - The Reply = With reference to feed back of Mr. RamaKrishna, please note that I have also considered development in locality. If the asset is improved by natural factors, without efforts and costs to owner, then there is accumulation of capital and if there is no cost of improvement, then profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not be regarded as profit or gain in context of S.45 and 48. Amendments to deem cost of acquisiton and cost of improvement in case of some specified assets are at best statutory recognition of factual aspects. Without amendment of charging s. 45 the charge will not apply even in cases of assets where such costs are deemed as nil. therefore, even in case of post amendment period for such asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, claim can be made for non applicability of S.45. Price fluctuation withou improvement in quality of any asset is a different thing and appreciation due to improvement in quality is different thing. A share bought at the time of IPO at say Rs.10/- per share, when the break-up value was Rs.10/- and project was underimplementation, can improve or detoriate in quality over a perioid of time depend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on working of companye, prospectus of company and the concerned industry, economy of nation, economy of world, relavant other factors like market price of companys raw material and finished goods, etc. Thus, even in case of share a case can be made out for accumulation and realization of capital. The judgments are still relevant aned the rule of strict interpretation and integrility of chargin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g section and computation provisions are still valid and can be applied. There is no harm in taking a chance by paying taxes in protest and without prejudice to play safe. - Dedcution of cost of acquisition and cost of improvement - Query Started By: - DEV KUMAR KOTHARI Dated:- 5-8-2009 Income Tax - Got 2 Replies - Income Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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