Section 38 : Expenses and net expenses for property and liability

1) The following expenses shall be included in the expenses for the property or liability of any person subject to this Act:-

a) In respect of any property, the expenses made by that person in acquiring that property, inclusive of the following amounts:-

(1) The related expenses made in the construction and production of that property, and

(2) Any amount required to be included in the computation of the income of that person as a result of the acquisition of such property.

b) The expenses made by that person in obtaining the ownership of that property or liability, inclusive of the expenses incurred in the alteration, improvement, repair and maintenance of the property or liability, and the expenses in the repair and maintenance of the property,

c) The expenses made by him in the disposal of the property or liability and

d) Casual expenses made by him in acquiring the property or bearing liability and disposing of such property or liability.

Provided that the expenses referred to in clauses (a), (b), (c), (d), and (e) of sub-section (1) of Section 21 and the expenses that are allowed to be deducted in the assessment of income are not required to be included in such expenses.

2) The net expenses for any property or liability at any particular time shall be so computed as to consider the amounts to the extent of the excess of the sum of all expenses for that property or liability than the sum of all incomes for that property or liability at that time.

3) The amount of expenses to be deducted in computing the income as referred to in Chapter-6 and 7 shall be deemed as if they were made in respect of the expenses for any property or liability and shall be applicable in respect of the expenses referred to in sub-section (1).

Provided that Section 26 shall not apply to the above-mentioned provision.