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2009 (8) TMI 846 - AT - Income TaxCapital gains computation - cost of acquisition - capitalizing interest on delayed payment of instalments - HELD THAT:- It is clear that interest had to be paid on two counts, viz. (i) the interest which was embedded in the instalments itself; and (ii) the interest paid on the delayed payment of instalments. As decided in the case of K. Raja Gopala Rao [2000 (11) TMI 31 - MADRAS HIGH COURT] as the assessee had not made the purchase with his own funds he was required to pay interest for the borrowed fund and secure the borrowing by creating a mortgage. Such a mortgage could not have been created earlier as he had to first acquire title before encumbering the same. Payment of consideration for the sale having been made with the borrowed funds, the borrowing directly related to the acquisition and the interest paid thereon would form part of the cost of acquisition. From the above it is clear that interest would also constitute cost of acquisition and therefore, we find nothing wrong in the order of the CIT(A) directing the AO to recompute the capital gains after capitalizing interest paid on delayed payment of instalments. The appeals filed by the revenue fail. Difference between the valuation declared by the assessee and the valuation u/s 50C - HELD THAT:- Since in respect of Noida properties, objections were raised even before AO showing that Noida Authorities itself has sold the plots in Phase II at Rs. 1,250 per square metre whereas the assessee has sold the plots at Rs. 1,425 per sq. mtr. There may be some logic in the argument of the learned DR that other plots may not be in the developed area but this can be determined only by the Valuation Officer. In case of flat at Mira Road also the assessee had raised objection, copy of which was filed before us. It was claimed in paragraph 1(b) that the flat was located on the outskirts of Mira Road and on the border of Bhayander and civic amenities like provision of water, etc. was very poor. We are of the view that once the assessee is raising objection no harm would be caused to the revenue if the matter is referred to the Valuation Officer for the proper valuation of the property. Therefore, we set aside the order of the CIT(A) and direct the AO to refer the valuation to the Valuation Officer and then adopt the value accordingly. The appeals filed by the assessee are allowed, for statistical purpose.
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