TMI Blog1976 (8) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned with the assessment year 1967-68. The assessee is an individual and during the year ending on November 12, 1966, which was the relevant accounting year for the assessment year 1967-68, the assessee sold plots of land to two persons for a total consideration of Rs. 32,100. The assessee had purchased these two plots of land from the Andhra Co-operative Housing Society Ltd. for a sum of Rs. 9,138. Before the ITO, the assessee claimed that the cost of the said property to the assessee amounted to Rs. 20,434, viz., the amount of Rs. 9,138, which was the purchase price and the amount of Rs. 11,344, which was the interest paid by the assessee on the borrowals by him for purchasing the property. He had, according to him, paid this amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Appellate Tribunal and the assessee filed cross-objections supporting the order of the AAC. Before the Tribunal, the department's representative conceded that the interest of Rs. 11,344 paid by the assessee on borrowed funds from January 1, 1957, to August 11, 1966, was neither claimed by the assessee nor allowed by the department year after year. The Tribunal held that the amount of interest was included in the total cost of acquisition along with the original price of Rs. 9,138, and the Tribunal upheld the order of the AAC. dismissing the departmental appeal. Thereafter, at the instance of the revenue, the question hereinabove set out has been referred to us for our opinion. In Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167, Khan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by him for paying the purchase price of Rs. 9,138 when he originally purchased the two plots in 1957. In CIT v. Mithlesh Kumari [ 1973] 92 ITR 9, the Delhi High Court has also taken a view similar to the one which we are taking in this case. The Delhi High Court there has held that the interest paid by the assessee on money borrowed for the purchase of an open plot of land constituted part of actual cost of the assessee within the meaning of s. 12B(2)(ii) of the Indian I.T. Act, 1922, for the purpose of determining the capital gain derived from the sale of the land. The basic principle, in cases of this kind, is to ascertain the actual cost of acquisition to the assessee and in arriving at the figure of actual cost of acquisition the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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