TMI Blog2023 (3) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation makes the existing position of law loud and clear. As a corollary, as per the existing position, the assessee is entitled to claim interest on borrowed capital used for acquisition of property as part of its cost of acquisition for the purposes of determination of capital gains. For this reason also, there appears to be no infirmity in the conclusion drawn by the CIT(A). Hence, we decline to interfere. Enhancement of cost of acquisition on account of loss of stamp paper - CIT(A) has allowed the cost of replacement of stamp paper since the stamp papers were purchased specifically for registration of flat and therefore, such amount was spent for acquisition of flat and hence forms part of the cost of acquisition. We find the reasoning given by the CIT(A) to be worthy of merit. CIT(A) has rightly found that the aforesaid cost is directly attributable to the cost of acquisition of flat proposed to be purchased jointly by the assessee and her husband which was later modified due to demise of the husband. We see no reason to interfere with the action of the CIT(A). Increase in the basic cost of flat - The cost of acquisition claimed by the assessee relates to the area ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired jointly by the husband of the assessee Late Shri Mahesh Aggarwal and the assessee as evidenced by allotments letter dated 21.12.2004 issued by the builder. The husband of the assessee expired and the ownership of the flat was transferred in August, 2010 in the name of survivor assessee. It was further noticed by the Assessing Officer that the assessee had taken housing loan to source the purchase of property at Omaxe the Forest and paid interest to DHFL (NBFC) for the same. As per the allotment letter issued by the builder dated 21.12.2004, the cost of property was shown at Rs.2,75,00,000/-. However, the assessee shown cost of acquisition of penthouse / flat at Rs.2,79,96,770/- while claiming indexation for determination of capital gain. In justification for variance, the assessee claimed that as per the allotment letter, the area of flat was 6500 sq. ft. but when the flat was ready the area stood increased from 6500 sq. ft. to 6610.84 sq. ft. Hence, the assessee was made to incur additional payment for such increase in the area. The assessee further claimed that she has also paid Rs.4,56,744/- to the builder for delayed payment of basic costs. Coupled with this, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed under Section 24 of the Act and does not qualify for deduction under Section 48 of the Act. In the wake of such adjustments to the cost of acquisition, the Long Term Capital Loss claimed by the assessee was restricted to Rs.2,08,46,527/- against the claim of Rs.5,34,61,155/- of the assessee. 4. Aggrieved, the assessee preferred appeal before the CIT(A). The CIT(A) took note of the relevant facts and the submissions made on behalf of the assessee and also the judicial pronouncements. 5. The CIT(A) found substantial merit in the plea of the assessee on all counts and thus reversed the action of the Assessing Officer and restore the position taken by the Assessee. The relevant operative paragraph of the order of the CIT(A) dealing with the issues are reproduced herein: 32. I have carefully considered the assessment order and written submissions furnished by the Ld. AR. The AO had disallowed the interest paid on the housing loan amounting to Rs.1,82,53,834/- stating that such interest needs to be claimed u/s. 24 of the Act and does not qualify as deduction us 48 of the Act. It was submitted by the appellant that they had never claimed any interest paid on the housing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a capital gain of Rs. 20,000.00 when, as a matter of fact, she had not made any profit at all by the transaction. Applying the said observations of the Calcutta and the Bombay High Courts to the present case, we hold that the Tribunal was right in additing the interest amount of Rs. 16,878.00 towards the actual cost of the land. 3.5. Further In the case of CIT Vs. Sri Hariram Hotels (Purchase) Ltd. (2010) 188 Taxman 170 (Kar), the Honourable Karnataka High Court has held as under:- 7. We are unable to agree with the arguments advanced by the learned counsel for the revenue for the simple reason on facts that even the Commissioner of Income Tax (Appeals) has held that interest had accrued as on 31/3/2003 and therefore, the Tribunal is justified in granting the relief to the assessee since the property has been purchased out of the loan borrowed from the Directors and any interest paid thereon is to be included while calculating the cost of acquisition of the asset. Therefore, question No. 1 has to be answered against the revenue. 3.6. In the case of ACIT Vs C. Ramabrahmam, the ITAT Chennai Bench 'C' in ITA No. 943/Mds/2012 has held that the assessee had pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.2004 which is always a provisional allotment and which is subject to the changes. The assessee was originally allotted flat measuring 6500 sq. ft which was subsequently increased to 6610.84 sq ft. As alleged by the Ld AO there is no area written in the agreement to sell and further no sale deed was executed as alleged by the LD AO, only the flat number 702 on the seventh floor is mentioned in the agreement to sell. So the cost of the flat paid by the assessee amounting to Rs.2,79,96,770/- should be taken as the cost and the proportionate disallowance of interest amounting to Rs.61,423/- should be allowed as cost of acquisition. The interest paid by the assessee to the builder was Rs.4,56,744/- and the proportionate interest allowed by Ld. AO is Rs 3,95,321/-. 4.2. I have carefully considered the assessment order and written submissions furnished by the Ld. AR. The AO had disallowed the cost of stamp papers purchased for the registration of the flat and it was to be cancelled due to death of the husband of the assessee and 10% cost of the stamp paper amounting to Rs. 1,35,930/- should be allowed u/s 48 of the Income Tax Act. As stamp paper were purchased specifically for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cost of improvement shall not include the amount of interest claimed under Section 24 of the Act. The amendment is proposed to take effect from Assessment Year 2024-25 prospectively. Thus, the proposed amendment in Section 48 to prevent double taxation makes the existing position of law loud and clear. As a corollary, as per the existing position, the assessee is entitled to claim interest on borrowed capital used for acquisition of property as part of its cost of acquisition for the purposes of determination of capital gains. For this reason also, there appears to be no infirmity in the conclusion drawn by the CIT(A). Hence, we decline to interfere. 7.4 Ground No.1 of the Revenue appeal is dismissed. 8. Ground No.2 of the Revenue s Appeal concerns enhancement of cost of acquisition of Rs.1,35,000/- on account of loss of stamp paper. The CIT(A) has allowed the cost of replacement of stamp paper since the stamp papers were purchased specifically for registration of flat and therefore, such amount was spent for acquisition of flat and hence forms part of the cost of acquisition. We find the reasoning given by the CIT(A) to be worthy of merit. The CIT(A) has rightly found that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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