Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2024 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (2) TMI 867 - ITAT DELHICapital gain computation - disallowance of interest on housing loan which has been claimed as part cost of acquisition - case of the assessee that deduction u/s 24(b) of the Act as claimed when the assessee declares income from house property whereas the indexed cost of the said asset was taken into consideration when the asset was sold and capital gains are computed u/s 48 - HELD THAT:- As per Section 48 of the Act, the cost of acquisition is the value for which the property has been acquired by the assessee and, therefore, expenses of capital nature for completing or acquiring the title of the property are includable in the cost of acquisition. Further it is also claimed that the assessee has not taken benefit of the interest or claimed the same under any of the provisions of the Act. As per Section 55(2) of the Act, the interest due or paid on the money borrowed from the date of borrowing of money and till the last day of previous year prior to the previous year of construction/acquisition shall be accumulated and such accumulated interest shall be allowed as deduction in five equal installments starting from the previous year in which construction of the house is completed or the house is acquired and interest from the seat of construction or acquisition of house till it is repaid, shall be allowed as deduction in respective previous years to which it belongs. Where the house property is sold within 5 years of the year of purchase or construction and the interest for the pre-construction period could not be claimed as deduction as it is allowed as deduction in five equal installments starting from the previous year m which construction of the house is completed or the house is acquired, the balance interest may be treated as part of cost of asset for computing capital gain. Thus, in our considered view, the cost of acquisition will include only the amount which has direct nexus with the purchase of property and the interest on the loan taken has no direct nexus with the property purchases. The Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. Tata Iron Steel [1997 (12) TMI 5 - SUPREME COURT] held that the cost of asset and cost of raising money for purchase of asset are two different and independent transactions and even subsequent to acquisition of assets cannot change the price paid for it. Thus we find no error or infirmity in the order of the Ld. CIT(A) in confirming the disallowance being indexation cost of acquisition of property on account of interest paid on borrowed capital - Decided against assessee.
|