TaxTMI 
TaxTMI 
2018 (3) TMI 733
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....n Scheme. Hence Appellant deposited Rs. 50 Lacs with SBI under capital Gain Scheme and further Rs. 50 lacs deposited with Andhra Bank under normal scheme. Deposits with both these banks continued for over 3 years and all the deposit receipts were produced before learned A.O. for consideration. 2- On the facts and in the circumstances of the case and in law, the Learned A.O. has erred in not considering Interest of Rs. 6,57,402 paid on Housing loan as Capital Cost for flat no 1002 in Ixora Building, for the period from 31/01/2005 till 31/03/2007 as per details given below. It may please be noted that interest amount of Housing loan " paid during this period of 3 years was nowhere claimed from any other source of income including income from House Property in the relevant I. T. Returns filed by appellant. Asstt Yr. Hsg loan Intt Indexed cost 2005-06 51,670 x 711/480 = 76,536 2006-07 3,06,387 x 711/497 = 4,38,312 2007-08 2,99,345 x 711/519 = 4,10,085 Total 6,57,402 9,24,933 The Learned A.O. has further erred in declining to deduct indexed cost of Rs. 9,24,933 on Interest factor from L.T.Cap Gain for which asses....
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.... cannot form part of improvement to the Capital asset. Relying upon the decision in the case of Smt. S. Valliammai v/s CIT (1981)127 ITR 713, the Assessing Officer disallowed the interest along with indexation and computed the Long Term Capital Gains as under: F.Y. Cost of Improvement/Cost of Flat as per assessee(Rs.) Indexed cost of improvement/Co st of flat in F.Y. 2010-11 as per assessee (Index Rate 11)(Rs.) Cost of improvement/Co st of Flat allowable Rs.) Cost Inflation Index Allowable Indexed coast of Improvement/Cos t of Flat in F.Y. 2010-11 (index Rate711)(Rs.) 2004-05 Flat cost-6732850 Interest on HBL-51 670 10049570 6732850 480 9973034 2005-06 Addl. Charges paid to builder-10630* Extra work by Cheque-50000* Loan Interest to ICIC1 Bank-306387 525112 497 00 2006-07 Parking Charges Paid-75000 Podium parking Hiranandani-175000 Loan Interest to 1C1CI Bank-299345 752571 75000 175000 519 102745 239740 2007-08 Infrastructure deposit-74550 Society Charges-30000 Maintenance Charges-149100 Loan Interest to IC1C1 Bank291738 Stamp Duty-319300 Registration fee-31600 1156553 74550 30000 149100 3193....
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.... 1 2 3 4 5 6 7 2005-06 51670 774741 00 51670 480 76536 2006-07 306387 1014659 00 306387 497 438312 2007-08 299345 376080 00 299345 519 410085 2008-09 291738 105570 150000(SOP)* 141738 551 182896 2009-10 283521 149280 150000(SOP) 133521 582 163116 2010-11 274644 163587 274644 (Rental inc.) 00 632 00 2011-12 188772 172990 188772 (Rental Incl.) 00 711 00 Total 1696077 73416 932661 1,27,0945 (B) Indexed cost of Extra work of Rs. 60680 86807 C ) Total Indexed cost 13,57,752 *SOP( Self occupied Property) 6.2. From the workings, it is seen that the appellant admitted that the interest claimed as deduction u/s 24(b) was not allowable as deduction. However it was requested that the interest paid in 1st 3 years, which was not claimed as deduction and in next 2 years amount which was more than the allowable deduction of Rs. 1,50,000 should be indexed and amount of Rs. 13,....
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....i Pai (1985) 152 ITR 247 (Kar) c. In view of Joginder Singh Chawla, Appellant Vs Asst. Commissioner of Income Tax -19(3), Mumbai. I.T.A No.349/Mum/2010, the interest which was not claimed as deduction u/s 24(b) and was capitalised is neither cost of acquisition nor cost of improvement. d. Further Hon'ble SC in Escorts Ltd & Another v Union of India (1993) 199 ITR 43 (SC) held that in the absence of clear statutory indication to the contrary, the statute should not be read so as to permit assessee two deductions. In view of above, the ground of appellant to allow interest on housing loan for computation of capital gain is dismissed. When the interest is not allowable, the question of indexation does not arise. The addition made by the AO is confirmed. 9. As regards the disallowance of Rs. 50 lacs not deposited in capital gains scheme, the ld. Commissioner of Income Tax (Appeals) held as under: 8.3. I have carefully examined the submissions of the appellant and the assessment order. As discussed in para 6 above, the AO has computed capital gains of Rs. 1,35,54,462, which is recomputed at Rs. 1,34,67,564 in para 7 above. For claiming exemption, the ap....
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....his account. The plea of appellant to allow deduction for normal fixed deposit with Andhra Bank is not acceptable and rejected. 10. Against the above order, the assessee is in appeal before us. 11. We have heard the learned departmental representative and that assessee in person. We have also perused the records. The assessee has made the following written submission: RELIEF NO -1 Total deduction of Fixed deposits of Rs. 100 Lacs kept with SBI (50 lacs) and Andhra bank (50 lacs) be considered from deduction of L.T. Capital Gain as against 50 Lacs allowed by A.O. for the SBI Deposit kept under capital gain scheme. Our Clarification- -While submitting return of income Long term Capital gain was estimated at Rs. 100 lacs. Appellant was under the notion that there is an Annual ceiling of Rs. 50 lacs for deposit under capital Gain Scheme. Hence Appellant deposited Rs. 50 Lacs with SBI under capital Gain Scheme and further Rs. 50 lacs deposited with Andhra Bank under normal scheme. Deposrts with both these banks continued for over 3 years and all the deposit receipts were produced before learned A.O. for consideration -It was specificall....
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....24,933 being Interest on housing loan till 31/03/2007 Be considered as capital cost as this was not claimed in any other head of income during A.Y 2005-06 to 2007-08 Our Clarification- - The Learned A.O. has erred in not considering Interest of Rs. 6,57,402 paid on Housing loan as Capital Cost for flat no 1002 in Ixora Building, for the period from 31/01/2005 till 31/03/2007 as per details given below. It may please be noted that interest amount of Housing loan " paid during this period of 3 years was no-where claimed from any other source of income including income from House Property in the relevant I.T. Returns filed by appellant. Asstt Yr. Hsg loan Intt Indexed cost 2005-06 51,670 x 711/480 = 76,536 2006-07 3,06,387 x 711/497 = 4,38,312 2007-08 2,99,345 x 711/519 = 4,10,085 Total 6.57,402 9,24,933 Detailed working of I.T. Returns submitted from A.Y.2005-06 to 2011-12 is attached for your immediate reference as .....................................Ann- C The Learned A.O. has further erred in declining to deduct indexed cost of Rs. 9,24,933 on Interest factor from L.T.Cap Gain for which assessee ....
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....fter the 1st day of April, 1999 and such acquisition or construction is completed within five years from the end of the financial year in which capital was borrowed], the amount of deduction under this clause shall not exceed two lakh rupees. Explanation.-Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital borrowed for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal instalments for the said previous year and for each of the four immediately succeeding previous years: Provided also that no deduction shall be made under the second proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan. Explanation.-For the purpose....