Capital Gains

Cost of improvement

Cost of improvement includes all expenditure of a capital nature incurred after March 31, 1981 by an assessee in making any additions to the capital asset and also includes expenditure incurred to protect or complete the title to the capital asset and to cure such title from any defect. The expenditure incurred therefore should increase the value of the capital asset. The cost of improvement however does not include any expenditure which is otherwise deductible in computing the income chargeable as income from house property; profit and gains of business or profession; or income from other sources.

The cost of improvement in relation to goodwill, or a right to manufacture, produce or process any article or thing is taken as nil.

In cases where the capital asset became the property of the assessee on account of certain transfers which are not regarded as transfer for the purposes of capital gains, the cost of improvement would mean only expenditure of capital nature incurred by the assessee or the previous owner after March 31,1981.