Question ID : 40536

019493

An assessee has purchased a house property for 3 crores out of sale proceed of a vaccant site of Rs. 6.25 crores. After purchase of the new house property he has spent around Rs60 lakhs for installing Air Conditioners. solar Energy system, Moduler Kichen, LED Televisions, screens and blinds for windows,, etc and made cub boards , spent labour on them, to make the house to suit his needs and habitable for his style of living. The assessing officer disallow all the above allowing only 10 % of them saying that the builder himself has provided main fiacilities. whether his disallowance is correct?

Cost of improvement is the capital expenditure incurred by an assessee for making any addition or improvement in the capital asset. It also includes any expenditure incurred in protecting or curing the title. In other words, cost of improvement includes all those expenditures, which are incurred to increase the value of the capital asset. However, any expenditure which is deductible in computing the income under the heads Income from House Property, Profits and Gains from Business or Profession or Income from Other Sources (Interest on Securities) would not be taken as cost of improvement. In this case , there is no improvement in the title of the assets due to incurring the additional cost of Rs 60L ...