rohit (student) (54 Points)
17 May 2013
sir i have a relative who was fighting for the property in the court from the past 30 years and so now they have decided too sell the property and resolve the issue
so he is asking wheather the amount paid to the lawyer for the past 30 long years can be deduced from the total amount he received after selling the property ??
Harsh Soni
(Employee)
(31 Points)
Replied 17 May 2013
No. From the sale proceed of Capital Assets, only cost of improvement and cost of acquisition can be reduced. This litigation expense does not fall under any of above two. Hence, can not be deducted.
rohit
(student)
(54 Points)
Replied 17 May 2013
sir but then the stamp duty ,legal expenditue, lawyer fees for the transfer documents are deducted from the amount received from the sale of the asset so does the lawyer fees given for the litigation issue too fight the case in the court for 30 long years not deduced from the amount being received after the sale ??
and what all includes in the cost of improvement ??
shankar
(student)
(97 Points)
Replied 17 May 2013
Dear Rohit,
Mr. Harsh sony is correct. Litigation expenes allowed where compulsary acquired by government and fight with government for additional compensation.
Cost of Imporvement Expenses are those expenditure incured for improving the value of the property (include payment made to hutment people for vaccating the place)
Z
( )
(2965 Points)
Replied 18 May 2013
I currently don't have any case law to site but in my opinion such expense should be included in Cost of acquisition
Mr. Harsh Soni is not wrong but there is a quirk. If such an expenditure can be added to Cost of acquisition then it will be allowed to be deducted.
Cost of acquisition is what assesse has paid to get the capital asset ,except for those which are specifically excluded or which have no relation whatsoever with acquisition of such capital asset.
rohit
(student)
(54 Points)
Replied 18 May 2013
sir please post a law soon or a quirk too support what ur'e saying because that would be more helpful for me too deduct it under the cost of aquisition !!
CAclubindia
