TaxTMI 
TaxTMI 
TaxTMI 
2015 (6) TMI 513
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....rent year - the year of transfer, indexing it for the inflation as obtaining from year to year, as part of the cost of acquisition and/or improvement, in the computation of income by way of capital gains, chargeable u/s.45. The interest for the period prior to f.y. 1997-98 was not claimed as the same was admittedly claimed and allowed as revenue expenditure in computing the business income u/s. 28, i.e., under the head 'income from business or profession' or as 'income from other sources' u/s. 56. The Revenue disallowing the same, the matter has travelled to the Tribunal at the instance of the assessee. 3. We have heard the parties, and perused the material on record. The assessee has claimed the interest cost as a part of the cost of acquisition and/or improvement (without actually specifying the same), so that we shall, as was the Revenue, obliged to consider it under either category; the said two costs being specified as eligible deductions u/s.48(ii). The first question, therefore, that arises is as to how is the interest cost relating to borrowings made to finance the acquisition of a capital asset, could be considered as toward its acquisition, which is already complete on ....
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....Ltd. [1998] 231 ITR 285 (SC), that the payment or non-payment, as the case may be, of a loan will not alter the cost of asset, which gets crystallized on the acquisition itself. That is, the financial obligation/s attached to an asset would not have a bearing on its cost of acquisition. Applying the said decision, the tribunal in the case of LML Ltd. v. Jt. CIT [2014] 33 ITR (Trib) 269 (Mum), discountenanced the insistence by the Department to increase or decrease, as the case may be, the value of the imported raw material on the basis of the corresponding increase or decrease in the purchase liability on account of fluctuation in the exchange rate. This was as the subsequent developments arise only due to the nonpayment of the said liability, a financing decision, which should not impact cost, as explained by the apex court in TISCO Ltd. (supra), which is, whether in relation to a fixed or a current asset, to be limited to that in bringing the corresponding asset to its present location and condition (refer AS-2 and AS-10 issued by the Institute of Chartered Accountants of India). For fixed assets, the additional qualification would be of bringing it to the working condition for i....
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....ch circumstances represents an essential ingredient toward acquiring the asset. The matter stands explained by the apex court in the case of Challapalli Sugars Ltd. (supra) as well as Tuticorin Alkali Chemicals & Fertilizers Ltd. vs. CIT [1997] 227 ITR 172 (SC) . Again, to bring an expense within the cost of its improvement, the expenditure has to be by way of a (physical) addition or alteration, adding value to the capital asset. Admittedly, no such improvement has taken place to the shares, which continue to be held as such, i.e., as acquired. This is again part of the settled law, for which we may refer to the decision in the case of Industrial Credits & Development Syndicate Ltd. vs. CIT [2001] 251 ITR 720 (Kar). We may not dwell on this aspect of the matter further, being a matter of trite law and, in any case, the interest cost under reference being for post acquisition period, and which has admittedly been considered by the assessee itself as a revenue cost, claimed and allowed as a revenue expenditure for the period 1980-81 onwards up to f.y. 1996-97. How could it then transform in character from f.y. 1997-98 onwards, to become a capital cost. This is incomprehensible....
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....ied upon, would be of assistance to the assessee. In the facts of that case, the assessee became the owner of the shares in the amalgamated company/s on the basis of the shares held in the amalgamating company/s, the cost of which would thus obtain (section 49(2) of the Act). The assessee, however, substituted the cost of acquisition with their fair market value as on 01.01.1964, an option available to it under the Act. The same being available to a shareholder of the amalgamating company, it was explained by the hon'ble court, would not operate to take away the said right from the shareholder of the amalgamated company/s, as the assessee. However, having substituted the said cost, the assessee was not entitled to deduction of the cost of bonus shares, i.e., in addition to the cost of shares of the amalgamating company/s. Clearly, and without doubt, the provisions of the Act shall prevail. We have only explained of the provisions of the Act as being in agreement with the standard and accepted notion and understanding of the cost of acquisition, being defined as including the cost of purchase, further explaining the nature of the interest as a time cost, which cannot thus be confuse....
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....mission of liability is a matter of fact, and which would therefore require being proved. The onus to establish that the conditions of taxability stand satisfied is always on the Revenue. In the present case, the Revenue states of the liabilities continuing to outstand in the assessee's books from 3 to 25 years. Surely, the same raises considerable doubts as to the existence of the liability/s. True, they stand not written back and continue to outstand in the assessee's books, but that is precisely the reason for the same being questioned by the Revenue, or entertaining doubts about the same. The doubt can by no means be considered as not valid, being in accord with the common practice and, thus, discharging the onus that law places on the Revenue. The accounting entries or the treatment that the assessee accords to an asset or liability in its books is not determinative of the matter. Again, the presumption would only be of the same representing the true state of affairs, but the inordinate delay in discharging the same raises considerable and valid doubt as to the existence of those liabilities as at the relevant year-end, i.e., as a fact. The onus on the Revenue, thus, gets disc....