Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2017 (9) TMI 660

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 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. - ITA No. 1807/Ahd/2015 - - - Dated:- 7-9-2017 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER For The Assessee : Shri T.P. Hemani, AR For The Revenue : Shri O.P. Meena, Sr DR ORDER PER .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ased on the material already available on record. The assessee has filed written submissions and also provided the additional evidences. Ld. CIT(A) has called for a remand report and the copy of which is available on page No.138 of the paper-book. The assessee has filed a rejoinder to the remand report and the copy of the same is also placed at page No.140-153 of the paper-book. Ld. CIT(A) somehow did not entertain this alternative contention of the assessee on the ground that sufficient opportunities were given to the assessee by the Assessing Officer during the course of assessment proceedings. Accordingly the ld. CIT(A) has rejected the contentions of the assessee and confirmed the disallowance. 4. Before us, the ld. Counsel for the assessee contended that if very taxability of the assessee is going to the effected, then the assessee has every right to take all possible pleas to save itself from the taxability of those amounts. He pointed out that a CBDT Circular No.14 of 1955 dated 11.04.1955 was brought to the notice of the ld. CIT(A) which contemplates that the Department must not take advantage of ignorance of an assessee as to his rights and it is their duties to assist .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ese aspects have not been disputed by the Assessing Officer in the remand report. On the strength of these details, he submitted that the interest expenditure deserves to be included in the cost of acquisition and the assessee deserves to be allowed deduction of such expenditure in the shape of cost of acquisition of assets while computing the capital gain arising to the assessee on sale of such assets. In support of his contentions, he placed reliance on the order of the Tribunal in the case of Shri Ashokkumar S. Vaswani vs. DCIT, rendered in ITA No.1528/Ahd/2012, dated. 24.01.2017. He also relied upon the decision of the Tribunal in the case of DCIT vs. Shri Fritz D. Silva, rendered in ITA No.236/Mum/2010, dated 08.05.2015. 5. The ld. Departmental Representative, on the other hand, relied upon the orders of the Revenue Authorities. 6. We have duly considered the rival contentions and gone through the record carefully. The first question for our adjudication is whether the cost of acquisition of capital assets under Section 48(2) would include interest amount qua borrowed funds used for acquiring such assets or not. This aspect has been considered by the ITAT, Mumbai Bench a .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... e past was not claimed as a deduction against any other income. Be that as it may, in so far as the factual position is concerned, there is no denial by the Revenue that monies borrowed have been utilized for acquisition of shares in question. Therefore, having regard to the factual findings of the CIT(A), in our view, the legal position as propounded by the Hon ble Madras High Court in the case of Trishul Investments Ltd (supra) supports the plea of the assessee that interest paid for acquisition of the shares would partake the character of cost of shares and, therefore, assessee had rightly capitalized the interest along with the cost of acquisition for the purpose of computing capital gains. The conclusion of the CIT(A) thus deserves to be affirmed. In the case of Shri Ashokkumar S. Vaswani (supra), the Tribunal has held as under:- 4. We have given our thoughtful consideration to rival submissions. The question before us as to whether cost of acquisition of a capital asset u/s.48 clause (ii) includes interest amount qua the borrowed funds used for purchasing the same. And more particularly in case when there is no dispute about direct nexus thereof as the fact of in .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... s. She has annexed all supporting documents. The ld. First Appellate Authority called for the remand report on these documents and thereafter provided an opportunity to the assessee to rebut the remand report. The assessee has submitted her rebuttal which is available on page Nos. 142 to 152 of the paper-book. We have analyzed all these details. 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 tr .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates