TMI Blog2011 (5) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... orrowed capital. 3. Whether the CIT(A) has not erred in observing the appreciate position of law as laid down through insertion of Section 55 of the Income Tax Act, 1961. 3. The limited issue raised in the present appeal is in connection with the computation of cost of acquisition of the assets by including the amount of interest on borrowed capital and part of cost of acquisition and thereafter indexing the same, which in turn was directed to be excluded from the value of sale consideration of computing the income from long term capital gains. 4. The brief facts of the case are that the assessee had sold the property at Manimajra for a total consideration of ₹ 1.75 crores during the year. The assessee had declared long term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and further the interest paid in addition to the installments paid was not considered as part of cost of acquisition of asset by the Assessing Officer. In appeal the CIT(A) held as under:- 9.I have perused the assessment records, the submissions of the counsel and the reported cases relied upon. I have also gone through the provisions of section 48 55 of the Income Tax Act, 1961. After a careful consideration of all the facts of the case, I agree with the Counsel that cost of acquisition of property shall mean total cost of property which shall also include interest paid while acquiring the property through installments. The so called amendment in section 48 has in no way changed the definition of cost. The cost of property shall re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto: Provided that in the case of an assessee, who is a non-resident, capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m paid on account of securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004.] Section 55 reads as under:- Meaning of cost of improvement and cost of acquisition . (1) For the purposes of sections 48 and 49, - (a) .. (b) cost of any improvement ,- (1) in relation to a capital asset being goodwill of a business or a right to manufacture, produce or process any article or thing or right to carry on any business] shall be taken to be nil ; and (2) in relation to any other capital asset,-] (i) where the capital asset became the property of the previous owner or the assessee before the [1st day of April, [1981], means all expenditure of a capital nature incurred in making any additions or al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income from long term capital gains, the indexed cost of acquisition and index cost of improvement including any expenditure incurred in connection with the transfer is to be deducted from the sale consideration. The term cost of acquisition is defined u/s 55 (1)(c ) of the Act which talks about the cost to be adopted in the hands of the assessee in relation to the asset(s) acquired by the assessee vide different modes of acquisition. The cost of any improvement to the capital asset is defined u/s 55(1)(b) of the Act as expenditure incurred after the acquisition of assets being capital in nature including the cost of any additions / or alterations made to the capital asset after its acquisition. However, the said cost of any improveme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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