Long term cap gain- deductions permissible
This query is : Resolved
14 August 2017
dlf levies panelty for not completion of house on vacant plot..
in my case it worked out to rs1lakh
since i sold the plot , can i take this as expd and deduct from amt recd???
in my case it worked out to rs1lakh
since i sold the plot , can i take this as expd and deduct from amt recd???
16 August 2017
First of all please pose your query with full clarity without using any informal language then any expert is able post a reply.
16 August 2017
DEAR SIR
I HAD VACANT PLOT IN DLF WHICH I SOLD. DLF HAS LEVIED PANELTY AROUND 1LAKH FOR NON CONSTRUCTION OF PLOT WITH IN 3YRS OF POSSESSION@25PER SQMTR WHICH IS AS PER AGRT. I HV PIAD THE AMT
CAN I CONSIDER THIS AS EXPENDITURE AND MAKE DEDUCTION FROM THE SALE PROCEEDS RECD OR NOT
I HAD VACANT PLOT IN DLF WHICH I SOLD. DLF HAS LEVIED PANELTY AROUND 1LAKH FOR NON CONSTRUCTION OF PLOT WITH IN 3YRS OF POSSESSION@25PER SQMTR WHICH IS AS PER AGRT. I HV PIAD THE AMT
CAN I CONSIDER THIS AS EXPENDITURE AND MAKE DEDUCTION FROM THE SALE PROCEEDS RECD OR NOT
16 August 2017
The expenditure referred by you is not cost of acquisition or cost of improvement (Sec. 55 read with sec. 48).
However, this is an expenditure incurred wholly and exclusively in connection with the transfer [Sec. 48(i)] as the payment of damages for violation of the agreement is necessarily to be paid by you. As the payment is absolutely necessary to effect the transfer, it will be considered as an expenditure covered by this clause. In other words, without paying damages as per the agreement, sale of plot could not be effected.
Don't refer the payment as penalty, just refer it as damages. The compensation for violation of an agreement is always "liquidated damages" as stipulated by the agreement.
However, this is an expenditure incurred wholly and exclusively in connection with the transfer [Sec. 48(i)] as the payment of damages for violation of the agreement is necessarily to be paid by you. As the payment is absolutely necessary to effect the transfer, it will be considered as an expenditure covered by this clause. In other words, without paying damages as per the agreement, sale of plot could not be effected.
Don't refer the payment as penalty, just refer it as damages. The compensation for violation of an agreement is always "liquidated damages" as stipulated by the agreement.
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16 August 2017
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