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2014 (10) TMI 939 - AT - Income TaxComputation of capital gain on transfer of land and building - qualitative change in the title - termination of lease-hold rights on conversion of lease-hold land into free-hold land - LTCG OR STCG - period of holding as a lease-hold land - Held that:- The capital gain accruing on sale of the land in question was a long-term capital gain as the land held and transferred was a long term capital asset, since the said land was held for a period of more than 3 years. The nature of rights i.e. lease-hold or free hold is not a relevant consideration once the asset has been held by the assessee for a period of more than 3 years prior to the date of transfer. Thus we set aside the finding of the ld CIT(A), that the asset sold was a short-term capital asset and further hold that the land sold was a long-term capital asset and entire gain accruing on such transfer is taxable as a long-term capital gain only. See CIT Vs. Frick India Ltd [2014 (9) TMI 394 - DELHI HIGH COURT ] - Decided in favour of assessee Non-grant of indexation on the interest paid on borrowed funds - there was termination of lease hold rights on 29th March 1998, which was restored only on 06th August 2004 - Held that:- The borrowing costs are recorded in the books of accounts, year after year which have been accepted as such. It would be thus a fallacy to suggest that such borrowing cost in the shape of interest was not incurred for the development of the property. Further the year of capitalization under the building is also not a relevant consideration. The interest cost on year to year basis was capitalized under the head “capital work in progress” which was later transferred to building accounts. It is not in dispute that the borrowing costs have been incurred towards building as the AO has allowed the same as cost incurred while computing the capital gain. Thus there is no justification to contend that the indexation benefit will not be allowed on the borrowing cost. In the result the ground raised by the assessee are allowed.
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