Documents required for availing reconstruction expenses exemption

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  1. Lakshay Jindal

    Lakshay Jindal New Member

    Dear Sir
    I want to know what all documents are required by IT department for availing cost of reconstruction exemption in LTCG of a house property.
    Please guide me through this.
  2. Karan Batra

    Karan Batra Well-Known Member

    Dear Lakshay

    No Document is required to be submitted at the time of filing of ITR.

    However, in case of any notice from the tax departments, invoices for all the expenses would be required.
  3. Lakshay Jindal

    Lakshay Jindal New Member

    OK sir.
    But if case came up for scrutiny den anything else other than invoices have to be furnished to them?
  4. Karan Batra

    Karan Batra Well-Known Member

    The Invoices in the name of the person claiming the expense are only required.

    PS: Just ensure that the invoices related to something practical. For example: If you are claiming Cement Expense of Rs. 10 Lakhs and Bricks purchased were worth 50,000 only, that does not look genuine and AO may disallow Cement expense of Rs. 10 Lakh as it does not look practical in comparison to the bricks purchased.

    So just ensure that the invoices for the expenses look practical.
  5. Lakshay Jindal

    Lakshay Jindal New Member

    Ohk sir.
    I hope they won't check any of my banking details that whether actual payment has been made or not.?
    Thank you sir!
  6. Karan Batra

    Karan Batra Well-Known Member

    Banking details would surely be checked.

    And if you are making a cash payment, they will check where did the cash come from?
  7. Lakshay Jindal

    Lakshay Jindal New Member

    Ohk ...
    Thank you Sir for your kind Advice!
    You saved me from getting into a trouble.

    VAIBHAV DILIP RANE Active Member

    @Lakshay Jindal,

    Never under estimate A.O. - They are much more Intelligent & Smart.

    A.O. when send Notice of Scrutiny or Re-assessment they will send list of documents to be produce.

    Since You have Sold the property, AO will demand original Purchase Deed & Sales Deed.

    Firstly, he will Compare the Sale Consideration will the Actual Market Price. Bcos now days Black : White transactions are going on. If SC is less than MP, than he will ask for reason, if he agree than ok, otherwise pay additional LTCG.

    Secondly, he will check the Amount what you received on such Transaction. For this he will try to scrutinize your Bank Details, And try to figure out - if any Cash Transaction take place.

    Since you are claiming Reconstruction Expense, he will see the Ratio of Capital Expenditure & Revenue Expenditure. He will see whether due to such expense the life of Assets is Increase or not. If he find any expenditure Revenue in Nature than he shall Disallow your Expense, & LTCG will increase.

    He will vouch & verify for each and every amount.

    Than he will come at Indexation at two different point, first at purchase, than at Reconstruction.

    * A.O. has power to decide the value of Sale Consideration u/s. 50C.
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