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2019 (4) TMI 101 - AT - Income TaxCapital gain computation - Allowability of the interest on borrowed capital employed by the assessee for purchasing a capital asset - Mode of computation - computing short-term capital gain (STCG) arising on its’ transfer, which in the present case is by way of sale of a house property in January, 2007, i.e., within a period of less than ten months of its’ purchase by the assessee in April, 2006 - HELD THAT:- Why, the borrowed capital may be repaid immediately, while the acquisition, since complete, and thus its’ cost, would remain unaltered. Again, the borrowed capital may not be repaid even after the asset is sold, and interest may continue to be incurred, deploying the sale proceeds for any other purpose. In a given case, the asset may be sold on credit, so that interest cost continues to be incurred. The same, in short, it needs to be appreciated, is a holding cost, i.e., cost of holding the asset, post acquisition, allowable as a revenue expenditure where the asset is to be used for the purpose of business. As explained in CIT v. Tata Iron and Steel Co. Ltd. [1997 (12) TMI 5 - SUPREME COURT] reference to which was also made during hearing, there is a fundamental difference between the cost of an asset and the means of its’ financing. The manner or mode of repayment of the loan obtained to acquire an asset has, therefore, nothing to do with the cost of the asset acquired for the purpose of the business. There is, in view of the fore-going, no basis either on facts or in law to consider the interest cost for the period for which the capital asset was retained or held by the assessee prior to being sold/transferred as a capital cost and, thus, deductible u/s. 48 in computing capital gain u/s. 45 - Decided against assessee.
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