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TMI Blog2018 (3) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... under capital Gain Scheme and further Rs. 50 lacs deposited with Andhra Bank under normal scheme. Deposits with both these banks continued for over 3 years and all the deposit receipts were produced before learned A.O. for consideration. 2- On the facts and in the circumstances of the case and in law, the Learned A.O. has erred in not considering Interest of Rs. 6,57,402 paid on Housing loan as Capital Cost for flat no 1002 in Ixora Building, for the period from 31/01/2005 till 31/03/2007 as per details given below. It may please be noted that interest amount of Housing loan " paid during this period of 3 years was nowhere claimed from any other source of income including income from House Property in the relevant I. T. Returns filed by appellant. Asstt Yr. Hsg loan Intt Indexed cost 2005-06 51,670 x 711/480 = 76,536 2006-07 3,06,387 x 711/497 = 4,38,312 2007-08 2,99,345 x 711/519 = 4,10,085 Total 6,57,402 9,24,933 The Learned A.O. has further erred in declining to deduct indexed cost of Rs. 9,24,933 on Interest factor from L.T.Cap Gain for which assessee relied upon the latest ITAT Chennai judgment dt 31/10/2012 in the case of Assistant CIT Busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long with indexation and computed the Long Term Capital Gains as under: F.Y. Cost of Improvement/Cost of Flat as per assessee(Rs.) Indexed cost of improvement/Co st of flat in F.Y. 2010-11 as per assessee (Index Rate 11)(Rs.) Cost of improvement/Co st of Flat allowable Rs.) Cost Inflation Index Allowable Indexed coast of Improvement/Cos t of Flat in F.Y. 2010-11 (index Rate711)(Rs.) 2004-05 Flat cost-6732850 Interest on HBL-51 670 10049570 6732850 480 9973034 2005-06 Addl. Charges paid to builder-10630* Extra work by Cheque-50000* Loan Interest to ICIC1 Bank-306387 525112 497 00 2006-07 Parking Charges Paid-75000 Podium parking Hiranandani-175000 Loan Interest to 1C1CI Bank-299345 752571 75000 175000 519 102745 239740 2007-08 Infrastructure deposit-74550 Society Charges-30000 Maintenance Charges-149100 Loan Interest to IC1C1 Bank291738 Stamp Duty-319300 Registration fee-31600 1156553 74550 30000 149100 319300 31600 551 96198 38711 192395 00 412019 40776 2008-9 Loan Interest to ICICI Bank-283521 /furniture cost paid to wood Plaza- 679500 1176474 _________ 679500 582 00 830110 2009-10 Loan Interest to ICICI Bank-274644 Air conditioni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 172990 188772 (Rental Incl.) 00 711 00 Total 1696077 73416 932661 1,27,0945 (B) Indexed cost of Extra work of Rs. 60680 86807 C ) Total Indexed cost 13,57,752 *SOP( Self occupied Property) 6.2. From the workings, it is seen that the appellant admitted that the interest claimed as deduction u/s 24(b) was not allowable as deduction. However it was requested that the interest paid in 1st 3 years, which was not claimed as deduction and in next 2 years amount which was more than the allowable deduction of Rs. 1,50,000 should be indexed and amount of Rs. 13,57,752 should be allowed as deduction while computing capital gains. The revised capital gains was submitted as under: Sale Prize of flat 2,57,00,000 Indexed cost of flat including stamp duty and registration and indexed cost of improvement as tabulated above in para 6 12145538 Additional Indexed cost of interest allowable 1357752 1,35,03,290 Long Term Capital Gain 1,21,96,710 The revised capital gain was now recomputed at Rs. 1,21,96,710 instead of Rs. 99,14,319 originally. It was further stated that the deposit valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of capital gain is dismissed. When the interest is not allowable, the question of indexation does not arise. The addition made by the AO is confirmed. 9. As regards the disallowance of Rs. 50 lacs not deposited in capital gains scheme, the ld. Commissioner of Income Tax (Appeals) held as under: 8.3. I have carefully examined the submissions of the appellant and the assessment order. As discussed in para 6 above, the AO has computed capital gains of Rs. 1,35,54,462, which is recomputed at Rs. 1,34,67,564 in para 7 above. For claiming exemption, the appellant is required to Purchase or construct a house with in 2/3 years from the date of transfer of house. If the amount is not utilised for purchase/ construction of the new property till the due date of submission of the return of income, then it should be deposited in "Capital Gain Deposit Account" as per provisions of section 54(2) reproduced below. [(2) The amount of the (i) capital gain which is not appropriated by the assessee the purchase of the new asset made within one year before the date on transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting return of income Long term Capital gain was estimated at Rs. 100 lacs. Appellant was under the notion that there is an Annual ceiling of Rs. 50 lacs for deposit under capital Gain Scheme. Hence Appellant deposited Rs. 50 Lacs with SBI under capital Gain Scheme and further Rs. 50 lacs deposited with Andhra Bank under normal scheme. Deposrts with both these banks continued for over 3 years and all the deposit receipts were produced before learned A.O. for consideration -It was specifically mentioned in Annexure-'C to the IT Return dated 29th July 2011 that..." As investment in new flat is to be done within TWO years from the date of sale, capital gain amount is kept in Deposit accounts with State Bank of India and Andhra Bank Hiranandani Estate Branches as per Incometax rules." -As Maximum Investment is capped at Rs. 50 Lacs under Section 54 EC for Capital Gain Bonds, assessee presumed that this limit is applicable for deposits under Capital Gain Accounts Scheme 1988 also. Accordingly assessee deposited Rs. 50 lacs with State Bank of India in Fixed deposits under Capital Gain Scheme and further deposited Rs. 50 lacs as normal Fixed deposit with Andhra Bank as both thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08 2,99,345 x 711/519 = 4,10,085 Total 6.57,402 9,24,933 Detailed working of I.T. Returns submitted from A.Y.2005-06 to 2011-12 is attached for your immediate reference as .....................................Ann- C The Learned A.O. has further erred in declining to deduct indexed cost of Rs. 9,24,933 on Interest factor from L.T.Cap Gain for which assessee relied upon the latest ITAT Chennai judgment dt 31/10/2012 in the case of Assistant CIT Business Circle-IV V/S Shri C Ramabrahamam. Gist of this Judgment is Attached as............................................................Ann-D 12. Upon careful consideration, we note that the assessee has not invested either in flat or construction of accommodation or desposted the sum of Rs. 50 lacs in the designated capital gain account, instead it has deposited the same in Andhra Bank not qualifying for capital gain. The assessee pleads that it was due to mistaken understanding and adverse market situation in real estate as reasonable cause for not making the investment as required by the Act qualifying for exemption from capital gain. We find that it is trite law that the assessee can get relief only within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan. Explanation.-For the purposes of this proviso, the expression "new loan" means the whole or any part of a loan taken by the assessee subsequent to the capital borrowed, for the purpose of repayment of such capital. 14. From the above reading of law, it is apparent that the interest on housing loan has not been mandated to be allowed as deduction otherwise than the prescription of law prescribed as above. Furthermore, we find that the ld. Commissioner of Income Tax (Appeals) in his appellate order has referred to certain decisions of Hon'ble Apex Court and Hon'ble High Courts which are on this issue and are against the proposition being canvassed by the assessee. It is trite law that the decision from the higher judicial forums take precedence over the decisions of the tribunal. Accordingly, in our considered opinion, the ld. Commissioner of Income Tax (Appeals) has properly apprec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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