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2015 (10) TMI 943 - AT - Income TaxCapital Gains - transfer of property post family arrangement in name of family members as per the directions of the Court - Addition made towards Long Term Capital Gain assessable in the hands of the assessee on sale of property situated at Delhi - Held that:- A family arrangement by which each party takes a share in the property has been held as not amounting to a “conveyance of property” from a person who has the title to it to a person who has no title to it earlier. In CIT vs A.L.Ramanathan (1998 (12) TMI 36 - MADRAS High Court) the family arrangement was held to be not a transfer for the purpose of capital gains tax. Recognizing the family arrangement in the eyes of law, the action of the ld. AO in bringing to tax the long term capital gain is illegal and is hereby directed to be deleted in the hands of the assessee. - Decided in favour of assessee. Disallowance of interest paid on loans - Held that:- It is seen that the borrowed fund has been used for repaying the old borrowings by the assessee which has been duly used for the purpose of business. It is not in dispute that the original borrowings were used by the assessee for the purpose of his business. Hence, the interest paid by the assessee on borrowings which were utilized by repaying the old business borrowings is squarely allowable as deduction. Accordingly, we direct the ld. AO to allow the sum towards interest paid on loan. - Decided in favour of assessee.
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