18/02/2019
Cost of improvement :-
The provisions regarding cost of improvement are given below :-
1. General meaning :- Cost of improvement is capital expenditure incurred by an assessee in making an additions/improvement to the capital asset. It also includes any expenditure incurred to protect or complete the title to the capital assets or to cure such title. To put it differently, any expenditure incurred to increase the value of the capital asset is treated as cost of improvement.
2. Special provisions under the Income-tax Act :- The following special provisions given under section 55 in respect of cost of improvement should be noted -
• Expenditure incurred before April 1, 2001 not considered :- Any cost of improvement incurred before April 1, 2001 This not taken into consideration for calculating capital gain chargeable to tax. This rule does not have any exception. In other words, cost of improvement includes only expenditure on improvemem incurred on or after April 1, 2001, Expenditure incurred on improvement of a capital asset before April 2001 is always taken as equal to zero.
• Double deduction not permitted Cost of improvement does not include any expenditure which is deductible in computing the income chargeable under the heads “Interest on securities”, “Income from house property", “Profits and gains of business or profession" and “Income from other sources other sources”.
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