1983 (11) TMI 43

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....ost of the shares for the purpose of working out the capital gains on the sale of shares ? " During the previous year relevant to the assessment year 1975-76, the assessee, an individual, sold shares of the value of Rs. 74,902 and returned capital gains of Rs. 28,402. The assessee claimed deduction of Rs. 30,478, being interest paid to M/s. MGA Pai & Sons on the money borrowed for the purchase of the shares. The ITO disallowed this claim on the ground that the said expenditure had been allowed in computing her income from dividends, hence, such allowance was not permissible as per provisions of s. 55. The assessee's claim was allowed by the AAC and the Tribunal also agreed with that view, on an appeal by the Department. The main....

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....our opinion, on the facts stated, relates to the mode of computing the taxable income of the assessee. The interest paid by the assessee for the acquisition of the shares on the money borrowed for that purpose, undoubtedly is an expenditure incurred for the acquisition of the shares and, hence, constitutes " cost of acquisition " for purposes of s. 48. But the ITO has disallowed this expenditure claimed, for the reason that a sum of Rs. 29,116 paid towards interest and collection charges had already been allowed as an expenditure while computing the income from dividends, and that, therefore, the claim for allowance of Rs. 30,478 again is not permissible. The ITO relied upon the provisions of s. 55 to disallow the interest. On behalf of ....