Can cost of improvement be in cash?, Income Tax

[AMEY SHARMA]

I've done expenses such as fencing, lighting, and various other expenses amounting to say ₹ 3 lac all in raw cash? is any disallowance or penalty initiated? Note: when i sale property capital gain tax is attracted meaning it was not my business expenditure

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[DEV KUMAR KOTHARI]

Can cost of improvement be in cash?

Ans. Yes.

Take care to ensure that you have accounted for the same and recorded in cash book, ledger and Balance sheet.

If you have not maintained books of account, then you must be able to show sources from which you spent expenses (like cash balance in cash inflow statement, withdrawals from bank, cash income earned like salary or other income. Other wise expenses can be added in income as undisclosed expenses.