Commission expense, allotment date, and fresh appellate claims shaped the tax treatment of capital gains and deductions.

Commission expenditure was allowed where the assessee produced payment details and no lack of business nexus was found, so the disallowance failed. Interest on borrowed funds was remanded for fresh verification on whether it formed part of cost of acquisition, while the date of allotment was treated as the date of acquisition for capital gains purposes, supporting long-term capital asset treatment. A fresh claim for interest expenditure as business deduction was held entertainable at the appellate stage even without a revised return, and the matter was remitted for merits-based examination.

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Issues: (i) Whether the disallowance of part of the commission expenditure was justified; (ii) whether interest paid on borrowed funds could be included in the cost of acquisition for capital gains purposes and whether the date of allotment determined the period of holding of the property; (iii) whether the claim for interest expenditure as business deduction could be entertained at the appellate stage without a revised return.

Issue (i): Whether the disallowance of part of the commission expenditure was justified.

Analysis: The commission paid was accepted by reference to the earlier year's coordinate bench decision, where a higher percentage of commission to turnover had been treated as reasonable. The assessee had furnished details of commission payments, and the disallowance was not supported by a finding that the expenditure lacked business nexus.

Conclusion: The disallowance of commission expenditure was not sustained and the issue was decided in favour of the assessee.

Issue (ii): Whether interest paid on borrowed funds could be included in the cost of acquisition for capital gains purposes and whether the date of allotment determined the period of holding of the property.

Analysis: The dispute turned on whether interest on borrowed funds formed part of the acquisition cost and whether the property should be treated as acquired from the date of allotment or from the date of execution of the conveyance deed. The Tribunal held that the factual question whether the property was capable of being let out required correct verification and remitted the question of interest as part of cost of acquisition to the first appellate authority. On the revenue's challenge, the Tribunal affirmed that the date of allotment constituted the date of acquisition and accordingly the properties were held to be long-term capital assets.

Conclusion: The question of interest as part of cost of acquisition was remanded for fresh adjudication, and the revenue's challenge to long-term capital asset treatment failed.

Issue (iii): Whether the claim for interest expenditure as business deduction could be entertained at the appellate stage without a revised return.

Analysis: A fresh claim made before the appellate authorities is not barred merely because no revised return was filed. The Tribunal relied on the principle that appellate authorities can examine such claims on merits, and the matter required factual examination of whether the expenditure was allowable as business interest.

Conclusion: The claim was held entertainable and the matter was remitted for consideration on merits in favour of the assessee.

Final Conclusion: The assessee succeeded on the commission issue and on the revenue's challenge to the capital gains treatment, while the remaining interest-related claim was sent back for reconsideration, leaving the overall result partly favourable to the assessee.

Ratio Decidendi: The date of allotment can constitute the date of acquisition for capital gains purposes, and a fresh claim for deduction may be examined in appeal even if not made through a revised return.

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