TaxTMI 
TaxTMI 
2020 (11) TMI 744
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....d 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 other supporting evidences. During the course of assessment proceedings, the ....
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....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 18,62,084.00 2,20,31,767.00 Capital Gain 6,08,45,827.00 5,44,68,233.00 It is relevant to state that indexation of the cost incurred prior to registration is not claimed from the year fro....
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....as 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 nexus of loan taken with the acquisition of the property. Regarding the assessment for AY 2012-13 completed u/s 143(3), ld. CIT(A) has observed that since the interest is not routed through P&L account and further principle of Resjudicata is not applic....
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....ee 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 res judi cata. He submitted that rule of consistency is to be followed. There is no change into facts and circumstances, hence the authorities below ought to have taken a consistent view. He contended that the interest is to be capitalized and to be treated as a part of cost of acquisition. In supp....
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....ed 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 Bank in February, 2010. After paying of the loan to Directors and their relatives, surplus loan amount was advanced to group concerns. The loans were given in February 2010 and interest was recovered from them and only net interest was capitalized and thus, it had established the nexus of loan taken with the acquisition of the property. It was also stated that income was assessed u/s 143(3) for AY 2012-13 at the returned income. It was the conte....
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....ellant 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 2010-11, whereas the loan from ICICI bank was taken during FY 2009-10 and substantial amount was also advanced by the appellant during the FY 2009-10 to other parties, which means that the appellant has not charged any interest from these parties for FY 2009-10 and 2010-11. These facts clearly prove that the appellant has tried to reduce its tax liability on sale of the land under consideration. Thus, this contention of the appellant deserves to be rejected. (vii) It ha....