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TMI Blog2015 (8) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... uineness of the transaction." 3. Ld. DR also pressed application dated 5.3.2015 for admission of additional ground which reads as under:- "1. Allowing the interest of Rs. 12,82,571/- paid on loan taken from the bank to be capitalized and reduced from the sale consideration of the property while computing the capital gain by the AO." 4. We have heard arguments of both the sides on admissibility of additional ground of the revenue. Ld. DR submitted that the AO made disallowance of interest of Rs. 12,82,571/- paid on loan taken from the bank which was deleted by the CIT(A) with the conclusion that the interest paid by the assessee on loan taken from the bank is to be capitalized and rates from the sale consideration of the property while computing the capital gains. Ld. DR submitted that against the relief granted by the CIT(A) to the assessee on this issue, ground could not be raised while filing the original appeal, therefore, the same may kindly admitted as additional ground of the revenue being mixed with the ground of fact and law. Ld. AR objected to the admissibility of additional ground and submitted that the CIT(A) was right in granting relief and when the revenue has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. DR also placed rejoinder to the above submissions by the assessee and submitted that the assessee has deliberately concealed particulars of her income and despite summons issued to these creditors nobody attended nor the required details/confirmations, bank account and ITRs were filed, therefore, the assessee did not discharge her onus to prove genuineness and creditworthiness of these creditors therefore, addition made by the AO u/s 68 of the Act is sustainable and in accordance with law. 8. On careful consideration of above submissions from bare reading of the impugned order of the CIT(A), we note that the CIT(A) granted relief for the assessee with following observations and conclusion:- "4.2 In Ground No. 2, the appellant has impugned the addition of Rs. 28,75,000/- as her income from as her income from undisclosed sources u/s. 68 of the Act. She submitted that temporary loans had been taken by her from Sh. Manoj Kumar and Sh. Uttam Singh and since, she was not on good terms with them as on today, she requested that these persons may be summoned u/s. 131 of the Act. Accordingly, summons were issued to both Sh. Manoj Kumar and his father Sh. Uttam Singh. The appellant also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to the respective creditors which were not complied and the CIT(A) also served a show cause notice proposing to impose penalty u/s 272A(1)(c) of the Act. In this situation, the CIT(A) was right in holding that the assessee discharged her onus by way of filing required details, confirmation and other relevant documentary evidence and also by filing PAN Number and addresses of the respective creditors. However, the alleged creditors did not comply with the notice u/s 131 of the Act and did not appear either before the AO or before the CIT(A) but the first appellate authority adopted course of verifying the genuineness of the transaction and creditworthiness of the respective creditors from their respective banks by issuing notice u/s 133(6) of the Act. On the basis of information received therefrom the CIT(A) has drawn a logical conclusion that Shri Manoj Kumar and Shri Uttam Singh had sufficient bank balance in their accounts before issuing cheques to the assessee which shows genuineness of the transaction as well as creditworthiness of the alleged creditors. In this situation, the addition made by the AO u/s 68 of the Act could not be held as sustainable and the same was rightl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized representative of ICICI Bank, the CIT(A) also noticed that in the case of loan taken by ladies, bank has a policy of including names of their husband which appear first and the name of the female assessee appears later in the loan document. The CIT(A) also observed that the loan taken by the assessee from ICICI Bank was of Rs. 85 lakh and impugned interest of Rs. 12,82,571 was paid to the bank from her bank account in Karur Vysya Bank, therefore, the benefit of capitalization of this interest cannot be denied. The main contention of the revenue is that when the property was purchased much earlier at the cost of Rs. 63,68,450, then the interest paid by the assessee on subsequent loan from ICICI Bank on loan amount of Rs. 85 lakh cannot be allowed to be capitalization while deducting capital gain on sale of said property. 13. From the first appellate order in para 4.4 at page 5-6 we note that the CIT(A) granted relief for the assessee by observing as under:- "4.4 In the fourth ground of appeal, the appellant has impugned the addition of Rs. 12,82,571/- being interest paid to bank on loan taken by the appellant against property bearing no. 163, Deepali, Pitampura, Delhi on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jointly by the assessee and her husband amounting to Rs. 85 lakh and impugned interest was paid to the bank from the assessee's bank account in Karur Vysya Bank Ltd. At this juncture, we respectfully take cognizance of the ratio laid down by the Hon'ble Jurisdictional High Court of Delhi in the case of CIT vs Mithilesh Kumar reported in 92 ITR 09 (Del) wherein it was held that the assessee in order to purchase the land had not only to borrow the amount of Rs. 95,000 which was the consideration for the purchase of the land but also had to pay interest of Rs. 16,878/- on the amount borrowed by her, therefore, the amount of consideration plus the interest paid by the assessee constitutes the actual cost of the land. 15. When we consider the facts and circumstances of the present case, respectfully following the dicta laid down by the Hon'ble Jurisdictional High Court in the case of CIT vs Mithilesh Kumar (supra), we hold that the assessee is entitled for capitalization of interest actually paid by the assessee on the loan taken for purchase of said property provided the interest so proposed to be capitalized is not claimed as deduction under the head of income from house property. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "2. The ld. AO has erred in law and facts while confirming the addition of Rs. 3,92,000/- to the returned income and not allowing the claim of vacancy allowance." 17. Apropos sole CO of the assessee, we have heard argument of both the sides and carefully perused the material placed on record inter alia findings and observations of the AO as well as conclusion of the CIT(A) in the impugned first appellate order. Ld. AR vehemently contended that the CIT(A) has erred in law and facts while confirming the addition of Rs. 3,92,000/- to the returned income and not allowing the claim of vacancy allowance. Ld. AR has also drawn our attention towards copy of the rent agreement between the assessee and the tenant M/s Cross Road Logistics Pvt. Ltd. dated 1.11.2008 and submitted that the property was rented out only for the period of five months i.e. from 1.11.2008 to 31.3.2009 and for the remaining seven months, the property was lying vacant as the same was not ready for use prior to this period. Ld. AR also submitted that the AO made addition on the basis of pure guesswork, surmises and conjectures which was not sustainable but the CIT(A) upheld the said addition without application of min ..... X X X X Extracts X X X X X X X X Extracts X X X X
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