2020 (5) TMI 80

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....e course of hearing, the ld. AR submitted that the assessee was allotted a Flat No. T-1/147 in Sector-6, Vidhyadhar Nagar, Jaipur having the measurement of 938.37 SFT by Rajasthan Rajya Sehakari Awasan Sangh Ltd., Jaipur on 12/01/1995 at a total cost of Rs. 4,85,941/-. 3. It was submitted that the assessee took loan of Rs. 2,80,000/- on 01/07/1995 and paid the balance amount from her own sources. The assessee incurred interest expense of Rs. 3,93,898/- during the loan tenure since 01/07/1995 to 31/03/2009 and this interest was capitalized. No deduction U/s 24 (b) was claimed in the ITRs filed for the various years. The assessee is submitting the copies of ITRs filed during this period with this paper book to prove that no interest was cla....

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....ate to core issue i.e. whether the Interest and other expenses can form part of the cost of the capital asset for the purpose of computation of capital gains. 8. In this regard, it was submitted that the assessee has not claimed the deduction of interest u/s 24(b) and claimed the same as cost of capital asset u/s 48 only. Therefore, appellant is not claiming 'Double Deduction' of the same amount which has been criticized strongly by the Hon'ble High Court in the case of Escorts Ltd & Another vs Union of India (1993) 199 ITR 43 (SC). 9. It was further submitted that it is almost a settled law, being upheld by the several co-ordinate Benches, that interest forms part of the cost of capital assets, in following cases: ITA No. I....

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....se of CIT vs. Shri Hariram Hotels (Purchase) Ltd. (2010) 188 taxman 170 (Kar) and has held as under:- " 9. We have perused the case records, analysed the facts and circumstances of the case and considered the judicial pronouncements, which was placed before us. In the case of CIT Vs. Mithilesh Kumari (supra), the Hon'ble High Court has held as under:- "(13) We are in respectful agreement with the observations of the Calcutta and the Bombay High Court in the decisions referred to above. In the present case, we find that the assessed in order to purchase the land had not only to borrow the amount of Rs. 95,000.00 which was the consideration for the purchase of the land but also had to pay interest of Rs. 16, 878.00 on the amount borro....

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....ee 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 on 31/3/2003 and therefore, 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. Therefore, question No. 1 has to be answered against the revenue." In the case of ACIT Vs C.Ramabrahmam, the ITAT Chennai Bench 'C' in ITA No. 943/Mds/2012 has held that the assessee had purchased house property, availing loan. The house property was subsequently sold an....