TMI Blog2019 (11) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to base price, processing fee, preference charges, external development charges, tire fighting charges, generator charges, etc. which all will form cost of acquisition incurred by the assessee for getting the ownership of the asset and, therefore, the assess e is entitled to get deduction thereof under the provisions of s. 48(ii) Deduction under section 24(b) and computation of capital gains under section 48 are altogether covered by different heads of income i.e., income from 'house property' and 'capital gains' - deduction u/s 24(b) is claimed when concerned assessee declares income from 'house property', whereas, the cost of the same asset is taken into consideration when it is sold and capital gains are computed under section 48. We do not have even a slightest doubt that the interest in question is indeed an expenditure in acquiring the asset. Since both provisions are altogether different, the assessee in the instant case is certainly entitled to include the interest amount at the time of computing capital gains under section 48 - See Praveen Gupta vs. Assistant Commissioner of Income Tax [ 2010 (8) TMI 820 - ITAT DELHI] and ACIT vs. C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. That Ld. CIT(A) has erred in facts and in law, in not appreciating that where an asset is acquired by availing a loan, payment of interest in respect of such loan can only be made subsequent to the purchase, and not at the time of or before the purchase. 7. That Ld. CIT(A) has erred in facts and in law, in not appreciating that as the payment of sale consideration by the Appellant (at the time of acquisition of the asset) was admittedly made out of the borrowed funds, such borrowing directly related to the acquisition, and therefore, interest paid thereon would naturally form part of the cost of acquisition. 8. That Ld. CIT(A) has erred in law, in not appreciating that sec. 48 of the Act is exclusively for the purpose of computation of capital gains which alone prescribes and should govern the mode of computation of capital gains, and not sec. 24(b) of the Act which is not for computation of capital gains. 9. That both Ld. AO and Ld. CIT(A) have erred law, in failing to understand the mode of computation of capital gains in its true spirit, which is that in determining the income under the head 'capital gain', ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Gains'. In light of the above grounds, your Appellant prays for deletion of disallowance made by Ld. AO and upheld by Ld. CIT(A), of INR 12,86,648, being the interest paid in respect of loan obtained exclusively for acquisition of capital asset. The above grounds of appeal are mutually exclusive and without prejudice to each other. The Appellant craves to add, alter, amend and/or modify any of the grounds at or before the hearing of the Appeal. 2. The facts relating to the case are that the assessee filed return of income on 30.09.2014 declaring a total income of ₹ 28,11,410/-. The case of the assessee was selected for Limited scrutiny. Notice u/s. 143(2) of the Act was issued and served upon the assessee. In response to the notice, the AR of the assessee attended the hearing from time to time and filed the necessary details information / documents etc. as required. Books of accounts and vouchers were produced during the course of assessment proceedings which were examined by the AO. The assessee is an Advocate by profession and derived income from Business or Profession, inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tamount to, allow double deduction for the same expense, therefore, interest expense was disallowed from cost of acquisition. The assesse was asked to present bill / vouchers, copy of bank statement to explain the cost of improvement, as claimed by the assessee while calculating the capital gain on sale of property. In reply, the AR furnished confirmation for the cost of improvement, but there was neither any bills/vouchers of construction nor there was any detail of payment. Assessee also has not furnished any bank statement to substantiate the payment for construction, claimed as cost of improvement, hence, 20% of the total cost of improvement was disallowed and addition of ₹ 14,46,832/- on account of Long Term Capital Gain on sale of property was imposed by completing the assessment at ₹ 42,58,240/- vide order dated 16.12.2016 passed u/s. 143(3) of the Act. Against the assessment order dated 16.12.2016, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 31.5.2018 has partly allowed the appeal of the assessee. Aggrieved with the impugned order dated 31.5.2018, assessee is in appeal before the Tribunal. 3. At the time of hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible to claim interest paid on housing loan as part of the cost of acquisition in computing capital gains as the said interest was allowed as a deduction from house property 3. ITO vs Smt. Pushpaben Wadhwani,lTAT, Ahmedabad ,16 ITD 704. In the instant case, from the order of the ITO it is not clear as to when the assessee acquired the flat in question and whether she was allowed deduction of interest payments in computing the income from the said flat under the head 'Income from house property' in earlier years. If that be so, then the interest paid on the loan cannot be treated as part of 'the cost of acquisition'. However, if the assessee has not been allowed such deduction in earlier years, then in view of the decision in the case of Maithreyi Pai (supra), the interest should form part of 'the cost of acquisition' of the asset sold by her. Since this aspect of the matter requires investigation, I set aside the orders of the income-tax authorities on this point and restore the case once more to the file of the ITO with a direction to give his decision afresh keeping in mind the. Observations made in this order and aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as shown the total cost incurred by him for the relevant property at a sum of ₹ 55,81,062/- which included the base price of the flat, stamp duty paid for having the conveyance deed in his name, interest paid thereon, fire fighting charges, generator charges and processing fee and other miscellaneous charges. The details are provide at p. 16, according to which the payment made as per conveyance deed is a total sum of ₹ 40,45,968/-. The payment made on account of stamp duty is a sum of ₹ 5,05,752/-. The payment made in respect of interest is a total sum of ₹ 8,65,032/-. The payment made for firefighting charges is an aggregate sum of ₹ 34,960/-. The payment made for generator charges is an aggregate sum of ₹ 46,941/- and aggregate sum paid for processing fee and other miscellaneous charges is ₹ 80,437/-. The assessee has also enclosed the receipts issued by the builder in respect of each item at pp 18 to 38 of the paper book. Each of the payments made by the assessee is in respect of flat purchased by him and is issued by DLF Universal Ltd. It is not the case of the Revenue that the assessee did not make any extra payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital: There is no quarrel that since the assessee's claim of deduction was under the statutory provisions; therefore, he succeeded in getting the same. However, after the property Was sold, he also chose to include the interest amount while computing capital gains under section 48 of the Act , which reads as under:- 48. The income chargeable under the head Capital gains shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely :- (i) expenditure incurred wholly and exclusively in connection with such transfer: ii) the cost of acquisition of the asset and the cost of any improvement thereto: After perusing the above said provisions, we are of the opinion that deduction under section 24(b) and computation of capital gains under section 48 of the Act are altogether covered by different heads of income i.e., income from 'house property' and 'capital gains' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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