9911796707
TMI Blog2021 (3) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax, Central Circle -6(4), Mumbai (hereinafter referred to as ld. AO). 2. The only issue to be decided in this appeal is as to whether the ld CITA was justified in confirming the disallowance of interest of Rs. 12,15,500/- made by the ld AO which was sought to be claimed as deduction from Short Term Capital Gains in the facts and circumstances of the case. 3. We have heard the rival submissions and perused the materials available on record. We find that the assessee is an individual and had filed his return of income for the Asst Year 2015-16 on 30.9.2015 declaring total income of Rs. 1,01,16,030/-. The assessee is having business income, income from house property , income from short term and long term capital gains and income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the allowability of interest in the sum of Rs. 12,15,500/- and its set off with short term capital gains. 3.2. We find that the ld AR pleaded that this interest of Rs. 12,15,500/- was incurred for the purpose of acquisition of shares of Indiabulls Hsg Fin Ltd. Infact this interest was debited by the share broker itself as funds were admittedly borrowed from the broker for purchasing shares of Indiabulls Hsg Fin Ltd. Accordingly the assessee pleaded that this interest cost is part of the cost of acquisition as one to one nexus between borrowed funds with the investment in shares thereon are proved beyond doubt. The assessee submitted the copies of the bill and ledger of the broker before the ld AO to support this contention vide letter da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he borrowings utilized for purchase of shares and payment of interest thereon to the broker is not disputed by the revenue. We find that reliance in this regard has been rightly placed by the ld AR on the decision of co-ordinate bench of Pune Tribunal in the case of S Balan alias Shunmugam vs DCIT reported in 120 ITD 469 wherein it was held as under:- "7. To deal with the first question, it is worth mentioning in the beginning itself that the admitted position is as per the statement made by the ld. A.R. that the burden of interest has never been claimed by the assessee as a revenue expenditure, but it was always being capitalized in the past. The revenue authorities have also mentioned that the investment in shares was out of the cash c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, he was apprehensive, that if the burden of interest is for retaining or maintaining a capital asset then not to be allowed. On this proposition of ld. CIT(A), we are of the view that even if it is a situation that a capital asset is acquired out of the borrowed funds having liability of interest, and since it had been capitalized in the books of account treated as a part of cost of asset and never claimed as a revenue expenditure, then that too is towards enhancing the cost of such capital asset and cannot be segregated from the cost of acquisition. Nevertheless, this question has been answered by few decisions as relied upon by ld. A.R. namely Mithlesh Kumari's case (supra) wherein the Hon'ble Court has held that the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, so as such, the expression should be construed in the sense which no commercial man would mis-understand. According to the Hon'ble Court, the accepted principle of Accountancy is that for determination of the cost, of a fixed asset, all the expenditure incurred for bringing into existence such asset must be included in the cost of acquisition. It was concluded that the capitalized interest must be included in actual cost. We have also examined an another decision as cited by the appellant, decided by Hon'ble Karnataka High Court in the case of Maithreyi Pai (supra) and have found that the question was the deduction of interest on borrowings utilized for purchase of shares and whether such interest constituted part of cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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