https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=762317 https://www.taxtmi.com/caselaws?id=762317 LTCG - interest paid is a cost of acquisition/improvement or not? - Whether the benefit of indexation is to be allowed to the interest cost? - HELD THAT:- Assessee in the earlier years, as claimed in the A.Y. 2013-14 under consideration, has also claimed the similar deduction of the interest expenditure under the head income from house property and as cost of acquisition/improvement, which has been continuously allowed by the revenue Authorities and therefore the rule of consistency is required to be followed. We are in agreement with the explanation offered by Ld. Sr. Advocate that from the aforesaid observations of the AO and the Ld. Commissioner it shows without saying that the Assessee has not claimed any double deduction and even otherwise in the earlier assessment years the same deduction was claimed and has been allowed. Are agreeable that even otherwise before considering/calculating the capital gain, we should consider the provisions of section 48 of the Act, wherein the provision has been inserted in clause II vide Finance Act, 2023 and w.e.f. 01.04.2024, whereby it is provided that the cost of acquisition of the asset or the cost of improvement thereto shall not include the deductions claimed on the account of interest under clause (b) of section 24 or under the provisions of chapter VIA. And therefore for the period prior to that provision inserted and made applicable from 01.04.2024, no such restriction can be imposed and/or made applicable. This particular amendment has been taken care of by the Ld. Commissioner, who by determining that the said amendment not being clarificatory in nature and therefore cannot be applied retrospectively. The Ld. Commissioner at last by considering the explicit provisions of section 24(b) of the Act as existed and applicable as on 31.03.2013, applied the same to the instant case and by following the decisions of the jurisdictional Tribunal favoring the Assessee and the dictum laid down in the case of CIT vs. Vegetable Products Ltd. [ 1973 (1) TMI 1 - SUPREME COURT ] wherein it was held that if two reasonable constructions of a taxing provision are possible, then the construction which favors the taxpayers must be adopted ultimately allowed the claim of the Assessee. Admittedly, prior to insertion of provision vide Finance Act, 2023 and made applicable from 01.04.2024, there was no such provision/restriction for excluding the deduction claimed on account of interest paid, under clause (b) of section 24 or under the provisions of chapter VIA of the Act. Hon ble Delhi High Court has also considered the judgment passed in Fort Gloster Industries Ltd. [ 1969 (6) TMI 16 - CALCUTTA HIGH COURT ] and ultimately held that the interest amount towards the actual cost of the land, was rightly added by the Tribunal. Interest paid on the borrowed funds for the purchase of property for the period prior to the provision inserted vide Finance Act, 2023 which was made applicable from 01.04.2024, over and above claimed u/s 24(b) of the Act, would be deductable while computing the capital gains. Decided in favour of assessee. Case-Laws Income Tax Tue, 26 Nov 2024 00:00:00 +0530