TaxTMI 
TaxTMI 
2015 (5) TMI 1125
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.... this appeal, the Revenue has raised following Grounds of appeal:- 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate that the interest on borrowed funds used for acquiring shares cannot be capitalized with the purchase cost of shares and indexation also cannot be claimed on the above capitalized cost for the purpose of computation of capital gain at the time of sale of shares as per the decision of the following tribunals." a) Macintosh Finance Estates Ltd. Vs. Addl. CIT Special Range -36, Mumbai reported in (2007) 12 Sot 324 (Mumbai) b) Mohanlal M. Shah Vs. DCIT Central Circle -11, Mumbai reported in (2007) 105 ITD 669 (Mumbai) c) Harish Krishnakant Bhatt Vs. ITO reported in (....
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....l price paid for the shares but also the interest paid by him on borrowings made for paying the purchase price in order to calculate the cost of acquisition of shares for the purpose of computing capital gains. In coming to such conclusion, the CIT(A) relied upon the Judgment of Hon'ble Delhi High Court in the case of CIT Vs. Mithilesh Kumari 92 ITR 09 (Del), wherein it has been held that the interest paid by the assessee on monies borrowed for purchase of an open plot of land constituted a part of the actual cost of the assessee for the purpose of determining the capital gain derived from the sale of land. Against the aforesaid decision of CIT(A), the Revenue is in appeal before us. 3. We have considered the rival stands. The controversy ....
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....rs the conclusion drawn by the CIT(A) in the present case. Notably, it is not disputed by the Revenue that the interest costs in question were incurred on the funds utilized for acquisition of shares in the past. In fact, as per the Statement of Facts filed before the CIT(A), the assessee had tabulated the amount of interest capitalized along with the cost of shares, which were purchased in the past. The assessee had also asserted before the CIT(A) without rebuttal, that the interest cost so incurred in the past was not claimed as a deduction against any other income. Be that as it may, in so far as the factual position is concerned, there is no denial by the Revenue that monies borrowed have been utilized for acquisition of shares in quest....
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....ound that interest expenditure was an allowable expenditure only under the head "income from other sources" and that the same cannot be allowed to be added to the cost of investment only because in the year before the Tribunal no deduction could be allowed to the assessee with respect to interest because the dividend income was exempt from tax. As per the Tribunal it would result into double deduction. In fact, we find that the question which is presently before us, arose for consideration directly before the Hon'ble Madras High Court in the case of Trishul Investments Ltd. (supra). Ostensibly, the Mumbai Bench of the Tribunal in the case of Macintosh Finance Estates Limited (supra), did not have the benefit of the Judgment of Hon'ble Madra....