TaxTMI 
TaxTMI 
2012 (5) TMI 768
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the case in allowing of interest expenditure claimed by the assessee in respect f shares applied in the IPO but ultimately not allotted to the assessee to the extent of Rs. 52.76 lacs. III. The appellant prays that the order of the CIT(Appeals) on the above grounds be set aside and that of the AO be restored.". 2. At the very outset, learned AR on behalf of the assessee submitted that the aforesaid issue is covered by the following decisions of the ITAT Mumbai Bench :- i) Smt. Neera Jain Vs. ACIT, passed in ITA No.1861/Mum/2009, vide order dated 22-2-2010. ii) Shri Harshad N. Patel Vs. ITO, passed in ITA Nos.1252&1958/Mum/2010, vide order dated 15-7-11. 3. Learned Senior DR, however, relied upon the findin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch have been ultimately allotted to the assessee. The Assessing Officer has given a very detail reasoning as to why such cost on acquisition on account of interest cannot be allowed. Accordingly, he worked out the addition on account of short term capital gain at `.52,75,680/- as per working given at page 8 of the assessment order. 5. In the first appeal, the CIT (A) after carefully considering the findings of the Assessing Officer as well as the detail submissions filed by the assessee, decided the issue ultimately in favour of the assessee and deleted the addition relying upon the decision of the ITAT Mumbai Bench in the case of Neera Jain (supra). Even though in his order he has given an elaborate reasoning that the entire interest ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o the extent of shares allotted. In our opinion, the assessee has to succeed on this ground. As rightly submitted by the Ld Counsel, the entire money has been borrowed by the assessee, with the sole purpose for acquiring the shares of the Punjab National Bank and NTPC Ltd. Though the applied shares were not allotted in full, that will not deprive the assessee from claiming the entire interest paid as the part of the cost of the acquisition of the shares allotted as the money borrowed has direct nexus with the acquisition of the shares. We, therefore, direct the A. 0 to treat the interest paid by the assessee to both the financiers as a part of cost of acquisition of the shares and allow the same as a deduction. Accordingly, Ground No. 1 is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e is no dispute about the fact that the entire loan was borrowed for the purpose of acquiring the shares of the Punjab National Bank and NTPC Ltd. As per the facts on record, there is no dispute at all that immediately after allotment of the shares money refunded by both the company were paid back to the financiers. The controversy is whether the entire interest on the borrowed money paid by the assessee can be allowed u/s. 48 treating the same as the cost of acquisition. The argument of the Ld Counsel is that funds were borrowed with sole intention for acquiring the shares and that is nowhere disputed by the A. 0. and as allotment of the shares was not in the hands of the assessee and hence, the interest paid to the financiers on the entir....