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TMI Blog2015 (12) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rs. 1,53,45,722/- as a long term capital loss instead of the claim of assessee i.e. short term capital loss of Rs. 55,64,950/- and business loss of Rs. 97,80,772/- ." 2. First ground regarding the issue is that Ld. CIT(A) has erred in deleting the addition made by Assessing Officer for an amount of Rs. 2,11,44,914/- on account of disallowance of interest claim by assessee u/s 24(b) of the Act. 3. Briefly stated facts are that assessee is a private limited company. It derives income in the form of rent besides income from investing in shares. The assessee is subsidiary of M/s Patton International Ltd. (MPIL in short). In the earlier year, MPIL has given a loan to M/s Centre Point Reality Pvt. Ltd. (CPRPL in short). The CPRPL then has purchased a house property out of the loan received from MPIL. Subsequently CPRPL got amalgamated with the assessee-company with effect from 01.04.2006. As a result of amalgamation the assessee-company became the owner of the house property which was purchased originally by CPRPL out of the loan taken from MPIL. Thereafter the assessee-company borrowed a loan from the State Bank of Mysore (SBM for short) and this borrowing from SBM was utilized for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant arranged from its banker, State Bank of Mysore, secured term loan (Under Rent Plus Scheme) from time to time for the purpose of acquiring/constructing house property/repayment of earlier loan. As per the banking norms, credit limit is enhanced from time to time depending upon the needs of the borrower and disbursement for additional limit is made after adjustment of the existing limit availed. This is exactly what happened here. Out of the enhanced limit of Rs. 20.00 crores, Rs. 8.37 crores being the existing outstanding loan, was repaid to State Bank of Mysore and the balance amount of Rs. 11.60 crores was paid to the holding company as repayment of loan. The loan granted by State Bank of Mysore is the second subsequent loan (second lender). There are no other parties involved (as may be described as third or fourth) who have provided loan for repayment of earlier loan taken from State bank of Mysore. Therefore, the ratio of the decision of the above referred Tribunal Case is squarely applicable in the instant case since the loan taken from State Bank of Mysore represent only second loan for repayment of original loan. iii) The assessee also relies on the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ginal loan was within the ambit of law and accordingly Ld. CIT(A) has deleted the addition which made by AO. It is also observed that no material has been brought on record by Ld. DR to controvert the above finding of Ld. CIT(A). A plain understanding of section 24 (b) of the Act reads as under:- "[Deductions from income from house property] 24. Income chargeable under the head "Income from house property" shall be computed after making the following deductions, namely:- (a) a sum equal to thirty per cent of the annual value; (b) where the property has been acquired, constructed, repaid, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital; Provided that in respect of property referred to in sub-section (2) of section 23, the amount of deduction shall not exceed thirty thousand rupees : Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition or construction is completed [within three years from the end of the financial year in which capital was borrowed], the amount of deduction under this claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conversion the market value of the share was Rs. 1,50,84,000/- as a result of conversion there was a loss for an amount of Rs. 55,64,950/- which the assessee-company claimed in its books of account. This loss was booked at the time of conversion of Long Term Investment as stock-in-trade during the FY 2008-09. The assessee-company sold these shares for an amount of Rs. 53,03,228/-. As a result of sale, there was a business loss for an amount of Rs. 97,80,772/- and assessee-company claimed this loss as business loss in the FY 2008-09. However, AO has disregarded the above transactions by observing that assessee has never been a trader in share and neither purchase nor sold any other shares during the year under consideration. So the conversion into stock-in-trade done by the assessee-company was not in normal course of the business of assessee. Accordingly, the AO treated the loss arising out of the purchase-sale transactions amounting to Rs. 1,53,45,722/- (2,06,48,950 - 53,03,228/-) as LTCG loss and covered u/s 10(38) of the Act.. 9 Aggrieved, assessee preferred appeal before Ld. CIT(A) who has deleted the addition made by AO by observing that as per CBDT Circular No. 4/2007 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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