Construction contract

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Ashwin (Querist)
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11 November 2013 I recently came across a case, where the client was involved in the business of construction and he used the land gifted by his father to him for construction of the building for sale. Now can he claim the cost of land (i.e. the original acquirer's cost)as an expenditure for income tax purposes while arriving at his profits? The cost of the land is around a crore and if he is not entitled to claim it as an expenses then he'll have to pay around Rs. 30 lacs as tax additionally. (i.e. 30% on 1 crore)can any one guide me here to arrive at a beneficial solution?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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11 November 2013 The indexed cost of land can be considered for calculating capital gains when the land is transferred along with the structure.
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Relevant points may be referred in Section 45(2).
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