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2017 (9) TMI 660 - AT - Income TaxDisallowance of interest expenses - inclusion of the interest expenditure in the cost of acquisition - whether the cost of acquisition of capital assets under Section 48(2) would include interest amount qua borrowed funds used for acquiring such assets ? - Held that:- We are satisfied that the assessee has demonstrated the availability of funds. She has taken the funds from Riddhi Trade Services Pvt. Ltd. and Navkar Broking Services Pvt. Ltd. These funds were deposited in Centurion Bank. Out of these funds, payments were made to five individuals viz. (1) Govindbhai Shankerbhai, (2) Patel Kantaben Govindbhai, (3) Patel Mukeshbhai Govindbhai, (4) Patel Anandiben Mukeshbhai and (5) Divesh G. Patel. Payments to these persons were made from Centurion Bank account. Bank statements of this bank were submitted before the ld. CIT(A). After receiving the funds from Rupen M. Modi, the amounts were repaid to Riddhi Trade Services Pvt. Ltd. and Navkar Broking Services Pvt. Ltd. The assessee has submitted the details as to how the funds have been received by her from Shri Rupen M. Modi and how these funds have been travelled to Riddhi Trade Services Pvt. Ltd. and Navkar Broking Services Pvt. Ltd. Thus, the assessee has demonstrated her stand of acquiring funds as well as its uses. If these details are looked into in the light of proposition propounded then it would reveal that the assessee is entitled for inclusion of the interest expenditure in the cost of acquisition. The same cost is to be set off against the short term capital gain arose to the assessee. It is pertinent to observe that on page No.84 of the paper-book the assessee has placed a working of interest expenditure incurred by her for purchase of land at Jodhpur. She has worked out a sum of ₹ 23,29,085/-. This interest expenditure deserves to be set off against the short term capital gain. We direct the Assessing Officer to allow the set off of this expenditure against the short term capital gain. In this way, the appeal of the assessee is partly allowed.
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