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TMI Blog2019 (11) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... e head "Income from house property" while computing income of the Appellant under the head "Capital gains" under sec. 48(ii) of the Act, without there being any stipulation in express terms to such an effect, in sec. 48 of the Act. 3. That both Ld. AD and Ld. CIT(A) have erred in law, by disregarding the provisions of sec. 48(ii) of the Act which clearly specify that while computing the capital gains, cost of acquisition of an asset shall be deducted from full value of sale consideration . 4. That Ld. CIT(A) has erred in facts and in law, in not appreciating that where a loan is obtained for the sale purpose of acquiring an asset, then interest thereon also constitutes an element of cost of acquisition of such asset, and not just the principal amount of such borrowing. 5. That Ld. CIT(A) has erred in facts and in law, in not appreciating that interest paid in respect of a home loan, is indeed an expenditure incurred for the purpose of acquiring the house property, and therefore, there cannot be any other purpose for payment of such interest by the borrower. 6. That Ld. CIT(A) has erred in facts and in law, in not appreciating that where an asset is acquired by availing a lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant, in respect of the loan obtained for acquisition of the asset in question. 12. That both Ld. AO and Ld. CIT(A) have erred in law, in not admitting that the law is well settled and if there could be two possible meaning or interpretations in a taxing statute, the interpretation which is beneficial to the Assessee shall apply. The Revenue is free to plug any gaps by making suitable legislation and avoid more than one possible meaning. 13. That Ld. CIT(A) has erred in facts and in law, in placing reliance on entirely unrelated judicial precedents i.e. upon cases where investments were made out of borrowed funds, for purchase of shares that were held as stockin- trade, entirely overlooking the cases cited by the Appellant that were directly relevant to the facts of the instant case and had upheld the deductibility of interest paid on home loans to acquire residential property in computing income under the head 'Capital 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use property, hence, interest expense cannot be allowed as cost of acquisition. Also, in the balance sheet, assessee has increased his capital by Rs. 54,87,715/- due to Long Term Capital Gain on sale of the aforesaid property, which shows that the assessee has not taken into account the interest expenses while calculating capital gain, which was capitalized in assessee's capital account, which clearly shows that the assessee has not capitalized the interest expenses on the capital borrowed for purchase of the property, hence, the same cannot be allowed as deduction, while calculating Long Term Capital Gain on sale of the property. AO further observed that allowing interest expenses on borrowed capital as cost of acquisition while calculating capital gain, and as deduction from income from House Property, will be tantamount 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject-matter of deduction under other heads like those u/s 57, we cannot understand how it could find place again for the purpose of computation u/s 48. No assessee under the scheme of the I. T. Act could be allowed deduction of the same amount is already allowed under twice over. We are firmly of the opinion that if an amount is already allowed u/s 57 while computing the income of the assessee, the same cannot be allowed as deduction for the purpose of computing the "capital gains" u/s 48. 2. Caption B.L Lingaraju vs ACIT [ITA No. 906/Bang/2014, ITAT Bangalore bench, dated 27.04.2016, in favor of revenue] It was held that in the present case, the taxpayer was not eligible 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' i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en from the above provision that the assessee is entitled to deduct the expenditure incurred by it wholly and exclusively in connection with such transfer and also the cost of acquisition of asset and cost of any improvement thereon. Therefore, the section itself permits the assessee to deduct the cost of acquisition as well as cost of any improvement thereon. The assessee has given full details of payments made by him to the developer and these details are given at pp. 15 to 17 of the paper book. The assessee has shown the total cost incurred by him for the relevant property at a sum of Rs. 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 Rs. 40,45,968/-. The payment made on account of stamp duty is a sum of Rs. 5,05,752/-. The payment made in respect of interest is a total sum of Rs. 8,65,032/-. The payment made for firefighting charges is an aggregate sum of Rs. 34,960/-. The payment mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding the issue of capital gains, it transpires that there is hardly any dispute that the assessee had availed the loan for purchasing the property in question. Since the assessee had shown the income under the head 'house property', he preferred to raise the claim of deduction under section 24(b) of the "Act", which reads as under: "b) where the property has been acquired, constructed, repaired, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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