Latest Query & Reply

1. If we purchase plot of land at below circle value then diff will be treated as taxable as per sec 56, then what will b the cost of acquisition at the time of sale? Need your opinion and clarification on this topic

2. Is there any provision for LIC agent to get deduction of 1/3rd against exp from commission he receive? Just like standard deduction from housing income?


As per section 49(4) of Income tax Act, 1961, where there is a gain arising out of transfer of property, the cost of acquisition of such property will be taken as per section 56(2)(vii) or (viia) of the act.

Therefore, at the time of sale, the amount of stamp duty of such property will be treated as the cost of acquisition.

(ii)CBDT vide circular no.648 dated 30.03.1993 allowed adhoc deduction on commission earned by LIC agent. When commission earned is less than Rs 60000/- in a year, the deduction on the first year’s commission is 50% of the commission. In case of renewal commission the deduction available is 15%. However, the maximum deduction allowed shall be limited to Rs 20,000. Where separate figures of commission is not available it would be 33.33% of commission subject to Rs 20000/-. In case commission earned is more than Rs 60000/- no adhoc deduction will be available, only actual expenses under head profit from business and profession will be allowed.