1986 (9) TMI 106

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..... It is common ground that this purchase was effected within the period stipulated in s. 54 for the purpose of exemption of capital gains. This property was purchased on 1st Feb., 1979. However, she did not occupy the same immediately. She did certain repairs and the Commissioner (A) has found these repairs to be civil and plumbing work and bathroom fitting The total expenses incurred were Rs. 40,106. 4. Before the ITO, she claimed that in computing the exemption available under s. 54, not only the cost of acquiring the new flat namely Rs. 8,75,000 but also the repairs of Rs. 40,106 should be taken into account as the cost of the property for purpose of s. 54(1)(i). The ITO did not allow this claim. 5. On appeal, the Commissioner (A) ....

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....warehouse or insurance charges, legal expenses incurred in connection with its acquisition and interest incurred before the commencement of production on capital contributed or borrowed to acquire such asset. In other words, in determining the actual cost of a fixed asset, all expenditure necessary to bring such asset into existence stand to put it in working condition may legitimately be taken into account." In the alternative, he also submitted that the matter would not have been any different if the assessee, instead of incurring the repair expenses herself, had asked the vendor to the incur the expenditure and include that sum of expenditure in the sale price. Then the Department cannot object to the assessee's claim. It does not mak....

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....eplaced with fittings of her own choice. Once we come to a finding that the flat was already in good repair, the further expenses incurred cannot be said to be part of the cost. 8. It now remains to consider the alternative argument, Sri Dastur has submitted that if by an agreement the vendor was asked to incur the expenditure and include the same in the cost, them there would have been no dispute regarding the admissibility of the claim. It is true. If the contract for sale has stipulated such a condition and the cost was to be part of the purchase consideration that the assessee would certainly succeed. But, the important point to be noted is that the assessee has not put the repairs as part of the agreement for sale. She had incurred ....