TaxTMI 
TaxTMI 
2017 (5) TMI 356
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....sition. 4. That on the facts and in the circumstances of the case, the ld CIT (A) erred in disregarding the judicial decisions relied by the assessee and relying on the decisions which has no application on the facts of the case of the assessee. 5 That the petitioner may kindly be permitted to raise any additional or alternative grounds at or before the time of hearing. 6. The petitioner prays for justice & relief." 2. Though, the assessee has taken multiple grounds of appeal. The main grievance is with regard to sustaining the disallowance of Rs. 5,52,877/- on account of cost of improvement while computing the capital gain. 3. The brief facts arising herein are that the assessee is an individual, derived income from interest and capital gains. She filed the return of income for A.Y. 2013-14 on 31-03-2014 admitting the total income at Rs. 3,92,310/-. The return was selected for scrutiny under CASS and notice u/s 143(2) of the Income Tax Act, 1961 (in short the Act) was issued on 03-09-2014. After hearing the assessee, the assessment was completed u/s 143(3) of the Act on 23-11-2015 determining the total income at Rs. 9,39,780/- by making additions / disallowances. 4. B....
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....regards case laws cited by the assessee of Hon'ble Delhi High Court it is stated that the issue involved in this case is "Whether on the facts and in the circumstances of the case the interest amount of Rs. 16,878/- and the ground rent of Rs. 3793/- constituted part of the actual cost of the plot to the assessed for the purpose of determining the capital gain?" Whereas in the present case the assessee is indexing the amount of interest paid as a cost of improvement which is not relevant from the cited case laws. As regards case laws cited by the assessee of Hon'ble Andhra High Court it is stated that the issue involved in this case is "Whether on the facts and in the circumstances of the case the interest amount of Rs. 11,344/- constituted part of the actual cost of the plots to the assessee for purposes of determining the capital gains for the assessment year 1967-68.?" Whereas in the present case the assessee is indexing the amount of interest paid as a cost of improvement which is not relevant from the cited case laws. As regards case laws cited by the assessee of Hon'ble Karnataka High Court it is stated that the issue involved in this case is "Whether t....
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....y the property... Payment of consideration for the sale indisputably having been made with the borrowed funds, the borrowing directly related to the acquisition and, interest paid thereon would form part of the cost of acquisition. " (emphasis supplied) g. CIT and ITO v Hariram Hotels (P) Ltd. (2010) 229 CTR 455 (Kar) "The Tribunal is justified in granting the relief to the assessee since the property has been purchased out of the loan borrowed from the Directors and any interest paid thereon is to be included while calculating the cost of acquisition of the asset." h. The Karnataka High Court in the case of CIT v Maithreyi Pai (1985) 152 ITR 247 (Kar) observed as under: "Mr. Bhat, however, submitted that section 48 should be examined independently without reference to section 57. Section 48 provides for deducting from the full value of consideration received the cost of acquisition of the capital asset and the cost of improvements, if any. The interest paid on borrowings for the acquisition of a capital asset must fall for deduction under section 48. 3. It is submitted that interest on such loan is a part of acquisition of cost and the computation of capital gain is....
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....e of the Act, income is broadly classified under five different heads and the income chargeable to tax under these heads has to be computed as per the relevant provisions applicable to respective heads of income. Section 45 to section 55A falling under Chapter IV- E deal with assessment of income under the head 'capital gains' and section 48 in particular prescribes the mode of computation of capital gains. As provided in section 48, expenditure incurred wholly and exclusively in connection with transfer and the cost of acquisition of the asset and cost of any improvement thereto are deductible from the full value of the consideration received or accruing to the assessee as a result of transfer of the capital assets. In the instant case, the deduction on account of interest paid to bank has been claimed by the appellant as deduction in computing capital gains. The appellant, however, has failed to explain as to how the said interest could be considered as cost of acquisition of the land or the cost of any improvement thereto. She has also failed to explain as to how the interest paid could be treated as expenditure incurred wholly and exclusively in connection with sale of ....
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....st was paid on the date of the purchase or whether it is paid subsequently. To exclude the interest amount from the actual cost of the assets would lead to anomalous results. Supposing she had purchased the land for Rs. 1,00,000.00 by raising a loan of that amount and had paid interest of Rs. 20,000.00 on the said loan and had sold the land for Rs. 1,20,000.00. It would be unreasonable to hold under such circumstances by excluding the interest amount from the actual cost of the land that she had made a capital gain of Rs. 20,000.00 when, as a matter of fact, she had not made any profit at all by the transaction. Applying the said observations of the Calcutta and the Bombay High Courts to the present case, we hold that the Tribunal was right in additing the interest amount of Rs. 16,878.00 towards the actual cost of the land." In the case of CIT Vs. Sri Hariram Hotels (Purchase) Ltd. (2010) 188 Taxman 170 (Kar), the Hon'ble Karnataka High Court has held as under:- "7. We are unable to agree with the arguments advanced by the learned counsel for the revenue for the simple reason on facts that even the Commissioner of Income-tax (Appeals) has held that interest had accrued as ....