9911796707
TMI Blog1986 (3) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 31-3-1977. 3. The facts of the case, the assessee's contentions and the decision of the ITO thereon, could be gathered from the following relevant portion of the assessment order: "Assessee has shown only income from capital gain on sale of flat at Bombay. Assessee purchased a flat in Navjivan Co-operative Housing Society, Bombay for Rs. 7,700. Assessee was granted a loan of Rs. 11,000. The amount of Rs. 7,700 was paid by the assessee in instalments. The said flat was sold out in 1976 for Rs. 45,000. Assessee has claimed cost of flat at Rs. 22,000 which has been arrived at as under: Rs. Initial contribution 7,700 Amount paid towards loan in monthly instalment 5,587 Interest of loan 6,476 Cost of fans & geysor 1,077 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent rebate and/or investment allowance is allowable on the interest etc. Since the expenses incurred by the appellant are for the acquisition of flat and for creating an asset, I am of the view that the ITO was not justified in rejecting the claim of the appellant. The ITO is directed to accept to adopt the cost of the flat as shown by the appellant." 5. Being aggrieved by the order of the AAC, the revenue has come up in appeal before the Tribunal. The learned representative for the department strongly supported the action of the ITO and urged that the order of the AAC should be reversed. According to him, neither the decision in the case of Challapalli Sugars Ltd. nor in the case of CIT v. Tensile Steel Ltd. [1976] 104 ITR 581 (Guj.) woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest paid on the borrowed capital for the purposes of purchase of shares should form part of 'the cost of acquisition' provided the assessee has not got deduction, in respect of such interest payment in earlier years. 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' in earlier years. If that be so, then the interest paid on the loan cannot be treated as part of 'the cost of acquisition'. However, if the assessee has not been allowed such deduction in earlier years, then in view of the decision in the case of Maithreyi Pai, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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