cost of acquisition for non-depreciable assets.

[MONIK DEDHIA]

Dear Experts,

I have purchased land as on 5/5/2007 (date of registration of agreement)  worth Rs.45,00,000/- and the date of payment is 6/6/2007. Land was purchased on Borrowed Money (Interest on same was totally = 2,85,000 appx.) and Brokerage and commission paid @ 15% on agmt value.

Finally land was sold as on 15/5/2010 for Rs.85,00,000/-.

My quarry is : 1. whether it is short term asset or long term asset (i.e. which date to be taken into consideration wheather date of agmt. or date of registratoin or date of payment.)

2. wheather interest paid on unsecured loan will form part of cost of acquisition or not.

3. Whether Brokerage paid at the time of purchase @ 15% is allowable or there is some limit on allowability of Brokerage and Commission.

Regards,

Monik Dedhia.

[DR.MARIAPPAN GOVINDARAJAN]

Whether you have got clarified in this issue? If not please inform.

AI Summary

Date of acquisition for land determining capital gains treatment may hinge on agreement, registration or payment timing.
Whether the land is short term or long term depends on the applicable date of acquisition (agreement date, registration date, or payment date). The taxpayer asks whether interest on borrowed funds used to purchase the land can be included in the cost of acquisition and whether brokerage and commission paid at purchase are allowable or subject to limits when computing cost for capital gains.