2010 (10) TMI 1175 - AT - Income Tax

Appeal dismissed for disallowance of housing loan interest & building repair fund in short term capital gains computation.

Joginder Singh Chawla Versus Asst. Commissioner of Income Tax -19 (3) Mumbai.

The appeal against the order under section 143(3) of the Income Tax Act, 1961 for the assessment year 2006-07 regarding the disallowance of interest paid ... - Issues involved: Appeal against order u/s.143(3) of the Income Tax Act, 1961 for AY 2006-07 - Disallowance of interest paid on housing loan and payment for building repair fund in computation of short term capital gains.Issue 1: Disallowance of interest paid on housing loanThe assessee claimed deduction of &8377; 1,92,820/- as payment of interest for housing loan in the computation of short term capital gains. The Assessing Officer disallowed this amount, stating it cannot be treated as the cost of acquisition of the property. The CIT (A) upheld this decision, noting that the expenses cannot be included in the cost of acquisition. The Tribunal confirmed this, stating that unless the amounts form part of the cost of acquisition, they cannot be considered for computing capital gains. The expenditure was not incurred in connection with the cost of acquisition and did not qualify as a cost of improvement. Therefore, the appeal on this issue was dismissed.Issue 2: Disallowance of payment made for building repair fundThe assessee also claimed &8377; 47,000/- as payment made on account of building repair fund in the computation of short term capital gains. The Assessing Officer disallowed this amount as well. The CIT (A) upheld this decision, stating that the expenses cannot be included in the cost of acquisition. The Tribunal confirmed this decision, emphasizing that the expenditure did not qualify as a cost of improvement and was not incurred in making any additions or alterations to the capital asset. As there were no specific provisions enabling deduction for these amounts, they could not be considered for computing income. Therefore, the appeal on this issue was also dismissed.The Tribunal, after hearing the arguments and examining the material on record, upheld the decisions of the lower authorities. It was emphasized that for expenses to be included in the cost of acquisition or improvement, they must meet the criteria specified in the relevant sections of the Income Tax Act. Since the expenses in question did not fulfill these criteria, they could not be allowed as deductions. The appeal filed by the assessee was dismissed, and the impugned order was confirmed.