07 June 2008
Mr.A agreed to sell a land to Mr.B and got Rs.100000/- as advance, later Mr.C A's friend offered higher amount than Mr.B offered, Mr.A accepted new offer and paid to Mr.B 100000/- which he received as advance and a compensation of another 100000/- my question whether Mr.A can take the compensation 100000/- as selling expense? or whether it can be taken as cost of acquisition? if land sold after 2 years of compensation received whether its possible to take indexation on that 100000/-
07 June 2008
Only if an item of expenditure is wholly and exclusively in connection with the sale of the asset it can be taken into consideration for deduction. In my opinion the expenditure narrated by you will not qualify. Nor would it be accepted as cost of acquisition.
CAclubindia
