Maruthi Reddy 28 October 2017

Alimony paid to wife claimed as deduction for Capital Gains

Dear Sirs, Husband & Wife decided to take divorce and Court ordered husband to pay 3Cr to pay to wife. Husband doesnt have Cash available and hence requested court to give some time so that he will sell the property and pay part of proceeds to wife. Court accepted and passed restriction order on title to property until the proceeds of property are paid to wife. Husband hence sold the property, paid the part of proceeds i.e. 3Cr to wife and CLAIMED THAT 3CR AS DEDUCTION FOR THE PURPOSE OF CALCULATING CAPITAL GAIN. PLEASE clarify whether it can be claimed as deduction based on the facts. PLEASE CLARIFY. Regards

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Vijay Raj Mahajan (Advocate) 29 October 2017

Capital gain has nothing to do how you spend the money received by selling your property. Deductions available for income from Capital Gain is something different and that cannot be clubbed with spending the amount. However your wife getting it as Alimony amount can get exemption from being equated with her total income for tax purposes.

Maruthi Reddy 29 October 2017

Dear Sir, The Course has passed on order saying that "No disposition by the owner of the property is to be registered except with the consent of his wife or under a further order of a court.

So would it not amount to costs incurred for improving the title.