TaxTMI 
TaxTMI 
2020 (11) TMI 744
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....ppreciating the fact that the funds borrowed were utilized in acquisition of asset and further erred in ignoring the submission made by assessee and evidences adduced. Appellant prays interest claimed by assessee deserves to be allowed while computing capital gain. 1.2. That Ld. CIT(A) has further erred in confirming the action of Ld. AO in recomputing the cost of asset sold by the assessee, by ignoring the fact that the total cost of asset claimed by assessee was accepted as declared in scrutiny assessment of A.Y. 2012-13 completed u/s 143(3) of the Income Tax Act, 1961. Appellant prays that interest capitalized for preoperative period deserves o be accepted as claimed. 2. That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal. 2. The facts in brief are that the case of the assessee was selected for scrutiny assessment under CASS. Accordingly, a notice u/s 143(2) of the Income Tax Act 1961(hereinafter referred as the 'Act') was issued on 31.08.2015. In response to the notice the Authorised Representative (AR) of the assessee appeared and filed the submissions and ot....
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....d it is submitted that the Assessee company sold the property owned by it for a total consideration of Rs. 7,65,00,000/- and after reducing Indexed cost of acquisition of Rs. 2,20,31,767/-, long term capital gain of Rs. 5,44,68,233.00 was offered for tax in the return of income filed. The indexed cost of acquisition as claimed is tabulated as under : Particulars Year As per books of Accounts Income from Capital Gains Sale Proceeds 7,65,00,000.00 7,65,00,000.00 Less: Cost/Indexed Cost Actual cost Indexed cost Cost of purchase till date 2009-10 90,57,235.00 1,34,56,873.00 Stamp duty 2009-10 4,00,100.00 5,94,452.00 Registration Fees 2009-10 1,85,570.00 2,75,713.00 Interest paid till acquisition 2009-10 19,09,227.00 28,36,652.00 Interest capitalized 2010-11 9,65,764.00 12,75,460.0. Interest capitalized 2011-12 14,46,718.00 17,30,533.00 Interest capitalized 2012-13 16,89,559.00 1,56,54,173.00 18....
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....records separately. While alleging so ld. AO has failed to appreciate the fact that the interest paid was included in the total cost of the property on year to year basis and indexation of the same is claimed only after the date when the appellant has become the owner of the property upon registration. Further loan taken was taken after the acquisition of the property and it is an admitted fact that loan borrowed for the acquisition of the property were paid off from the funds so borrowed from bank. Once the interest is allowable on the funds borrowed for purchases of property, interest paid on subsequent loan for repayment of such loan is also allowable as part of cost of asset so purchased. The borrowed funds were either utilized towards acquisition of property or were advanced as Loans to it group concerns and interest was recovered from such loans and only net interest was capitalized. It is immaterial whether it is housing loan or mortgage loan and it has to be established that the funds borrowed are utilized in the acquisition of property or for making payment of the funds borrowed for acquisition. By filing each individual details the Assessee company had established the nex....
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....e same. 5. On the contrary, Learned. Departmental Representative (DR) vehemently opposed these submissions and supported the orders of the authorities below. Ld. DR submitted that the claim of the assesseee is not allowable, as the assessee had failed to prove nexus and further the assesseee failed to produce the relevant material before authorities below. Ld. DR submitted that the Ld. CIT(A) has rightly observed that principle of res judi cata would not apply in the proceedings under the Income Tax Act. Every assessment year is independent assessment year. Ld. DR further submitted that the reliance is placed upon the decision of this Tribunal in ITANo. 975/JP/2016 rendered in the case of Shri Jagdish Wadhwani vs. ITO. 6. In rejoinder Ld. Counsel for the assessee submitted that case laws relied by the revenue are not applicable in the facts of the present case. He submitted that it is incorrect to say that the assessee had failed to provide relevant material on record. He drew our attention to the paper book to buttress the argument that the material was placed before the assessing officer. Further, he submitted that the assesseee has nowhere relied on the principle of ....
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.... cost Cost of purchase 2009-10 9057235 13456873 Stamp duty 2009-10 400100 594452 Registration fees 2009-10 185570 275713 Interest and pre op expenses 2009-10 1909227 2836652 Interest capitalized 2010-11 965764 1275460 Interest capitalized 2011-12 1446718 1730533 Interest capitalized 2012-13 1689559 15654173 1862084 22031767 Profit/Capital Gain 60845827 54468233 (iii) It was further stated that it had taken loan for acquisition of property and the interest paid was capitalized every year as the asset was not put to use. The agreement for purchase of property was made in 2006 and payments were made in installments from time to time. As the company had no funds, loans were taken to pay the installments and interest was paid thereon. Initially, the loan was taken from Directors and their relatives for acquiring the property. However, after registration of sale deed in January, 2010, loan of Rs. 215 Lac was taken from ICICI....
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....nt has taken a huge loan of Rs. 2.15 crore for repayment of outstanding loans taken by it earlier for acquisition of the said property. (v) It would not be out of place to mention here that as on 31.03.2009 and 31.03.2010, the unsecured loans from Shri Rajendra Kumar Jain and Shri Sanjay Godha, the Directors of the appellant company, were shown at Rs. 41,58,395/- & Rs. 38,30,000/- and Rs. 0/-and Rs. 43,50,000/- respectively, whereas as on 31.03.2010, the appellant company has provided loans and advances to the tune of Rs. 1,17,82,880/- and Rs. 24,33,120/- to M/s Ruby Buildcon P Ltd and M/s Royal Classic Buildmart P Ltd respectively. Thus, it is crystal clear that the borrowed funds from ICICI bank were not used for repaying the loans taken by the appellant company from its Directors for the purchase of the property under consideration, as claimed by the appellant. (vi) The contention of the appellant that it has capitalized only the net interest on the loan taken from ICICI bank has also been examined very carefully and it has been observed that the interest paid ledger account was submitted for the FY 2011-12 and FY 2012-13 only and not for the FY 2009-10 and FY ....