https://www.taxtmi.com/caselaws?id=776344 ITAT Bangalore held that compensation paid by the assessee to the first purchaser for cancellation of an agreement to sale qualifies as cost of improvement or expenditure incurred wholly and exclusively in connection with the transfer of the capital asset under Section 48. The tribunal rejected the revenue's contention that such compensation was not a cost of improvement, relying on precedents that interpret "improvement" broadly to include any enhancement in the asset's value. The payment was deemed necessary to clear legal claims, enabling the sale of the property with a clear title, thereby enhancing its value. Consequently, the compensation was allowed as a deductible expenditure in computing capital gains. The appeal by the assessee was allowed. en-us Tue, 22 Jul 2025 00:00:00 +0530 Fri, 08 Aug 2025 05:20:48 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=776344 ITAT Bangalore held that compensation paid by the assessee to the first purchaser for cancellation of an agreement to sale qualifies as cost of improvement or expenditure incurred wholly and exclusively in connection with the transfer of the capital asset under Section 48. The tribunal rejected the revenue's contention that such compensation was not a cost of improvement, relying on precedents that interpret "improvement" broadly to include any enhancement in the asset's value. The payment was deemed necessary to clear legal claims, enabling the sale of the property with a clear title, thereby enhancing its value. Consequently, the compensation was allowed as a deductible expenditure in computing capital gains. The appeal by the assessee was allowed. Case-Laws Income Tax Tue, 22 Jul 2025 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=776344