TaxTMI 
TaxTMI 
2016 (5) TMI 1147
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....acts in brief:- The assessee is a Chartered Accountant by profession. He derives income from house property as well as income from profession. He filed his return of income on 31.7.2007 declaring total income of Rs. 8,42,363/-. In his return of income he declared rental income of Rs. 47,11,140/- from two properties. He claimed Rs. 20,84,422/- u/s 24(b) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') on the ground that he incurred interest on borrowed capital, which were utilised for acquiring one of the properties. On a query from the Assessing Officer (hereinafter referred to as the AO), the assessee submitted that property bearing no.20, Block No.1, situated at Asaf Ali Road (Ajmiri Gate Extension), New Delhi (hereinaft....
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....arious occasions and this property was given as security. In the opinion of the A.O. the assessee discharged the loan or liability of other family members, to redeem honour of the family as well as the family business and that such discharging of liability cannot be treated as cost for acquisition of the property. He further pointed out that the claim of the assessee that he had incurred expenditure towards repayment of loans and liabilities to the tune of Rs. 2,22,38,664/-, for value of a property worth only Rs. 4,76,20,000/- is not acceptable. Aggrieved the assessee carried the matter in appeal. The First Appellate Authority came to a conclusion that the amount of Rs. 2,22,38,664/- was not paid for acquiring assets worth Rs. 47,62,000/- o....
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.... wrong while not accepting the fact that the funds borrowed for the purpose of repayment of liabilities created by the previous owner is a part of cost of acquisition as defined U/s 55(2) of the Il.T Act, 1961. 3. That the entire Assessment Order is wrong, arbitrary, illegal, unjust against the facts as well as against the Law. 4. That the appellant craves leave to amend any one or more of the grounds." 4. We have heard Shri P.D.Mittal, the assessee in person and Ms. Anima Barnwal, Ld. Sr.D.R. on behalf of the Revenue. 5. On a careful consideration of the facts and circumstances of the case, perusal of material on record, orders of the lower authorities and case laws cited, we hold as follows. 6. The assessee cont....
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....he Hon'ble Gujarat High Court in the case of CIT vs. Daksha Ramanlal, wherein it is held that the payment made by the person for the purpose of clearing the mortgages created by the previous owner, is to be treated as cost of acquisition. The interest of the mortgagee in the property is acquired at a cost and this is deductible u/s 48 of the Act. The Hon'ble Gujarat High Court has held as follows. "Held, when the previous owner gifted the mortgaged property to the assessee, what he had transferred to the assessee was the right, title or interest which he had in that property. When the assessee discharged the mortgage by paying Rs. 25,000 to the mortgagee, what he did was to purchase that right or interest which the mortgagor did no....