TaxTMI 
TaxTMI 
2022 (8) TMI 1133
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.... an individual. He has income from salary from M/s. Banox Exim Pvt. Ltd. where he is Director, income from house property, profit from partnership firm M/s. Prime Banox, long term capital gain and income from other sources. He filed his return for AY 2015-16 on 29.09.2015 declaring income of Rs. 1,57,00,290/-. The case was selected for scrutiny under CASS. The Ld. Assessing Officer ("AO") found that the assessee sold his residential house for Rs. 5,80,00,000/- and Computed Long Term Capital Gain ('LTCG') of Rs. 1,94,89,939/- out of which he claimed deduction of Rs. 1,70,00,000/- under section 54 of the Income Tax Act, 1961 (the "Act") and declared taxable capital gain of Rs. 24,89,939/-. While computing capital gain of Rs. 1,94,89,939/- the assesee has claimed deduction of interest cost of Rs. 1,00,91,252/- as indexed cost of acquisition. On query, the assessee submitted that interest incurred for acquisition of capital asset forms part of cost of asset and relied on the following decisions: 1. CIT vs. Sri Hari Ram Hotels Pvt. Ltd. 188 Taxman 178 (Kar) 2. CIT vs. Shri Raja Gopala Rao 252 ITR 459 (Mad) 3. CIT vs. Mithilesh Kumari (1973) 92 ITR 9 (Delhi) ....
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....ital asset would form part of cost of asset or not, the Ld. CIT(A) held in favour of the assessee by observing as under in para 8.4 to 8.7 of his appellate order: "8.4 On careful consideration of the facts of the case, I find that Assessing Officer has heavily relied upon the following cases a) Macintosh Finance Estates Ltd. vs Additional CIT (ITAT Mumbai) b) V. Mahesh, ITO vs Vikram Sadanand Hoskote (ITAT Mumbai). The Hon'ble ITAT Mumbai Bench, in the case of DCIT Vs Shri Fritz D. Silva delivered in 2015, has overruled the decision in the case of Macintosh Finance Estates Ltd. vs Additional CIT relying on the decision of Madras High Court in the case of Trishul Investments Ltd. The same is explained through following relevant extract of judgment - "In fact, we find that the question which is presently before us, arose for consideration directly before the Hon'ble Madras High Court in the case of Trishul Investments Ltd. (supra). Ostensibly, the Mumbai Bench of the Tribunal in the case of Macintosh Finance Estates Limited (supra), did not have the benefit of the Judgment of Hon'ble Madras High Court because the Judgment of Hon'ble Madras High Court was....
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.... 7. Aggrieved, the Revenue is in appeal before the Tribunal. 8. Ground No. 1 relates to disallowance of Rs. 1,00,91,252/- made by the Ld. AO on account of indexed cost of house property pertaining to interest expenses which has been deleted by the Ld. CIT(A). The Ld. DR supported the order of the Ld. AO and attempted to justify his view. The Ld. AR reiterated the same arguments which were advanced before the Ld. CIT(A). He relied on the decision of Chennai Tribunal in ACIT v. Ramabrahamam (2012) 27 taxmann.com 104 (Chennai-Trib) in which it was held that interest on housing loan which was claimed as a deduction under section 24(b) while computing income from house property was also deductible under section 48 as cost of acquisition. Several judgments were cited in support of the proposition that where property is purchased from borrowed funds, the interest paid therein constitute 'cost' to the assesee. It was also submitted by the Ld. AR that Mumbai Tribunal in its later decision in DCIT vs. Shri Fritz D. Silva in ITA No. 236/Mum/2010 dated 8.5.2015 overruled its earlier decision in Macintosh Finance Estates Ltd. (supra) relied upon by the Ld. AO, following the judgment of Hon....
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.... a perusal of both the provisions makes it unambiguous that none of them excludes operative of the other. In other words, a deduction under section 24(b) is claimed when concerned assessee declares income from 'house property', whereas, the cost of the same asset is taken into consideration when it is sold and capital gains are computed under section 48. We do not have even a slightest doubt that the interest in question is indeed an expenditure in acquiring the asset. Since both provisions are altogether different, the assessee in the instant case is certainly entitled to include the interest amount at the time of computing capital gains under section 48 of the "Act". Therefore, the CIT(A) has rightly accepted the assessee's contention and deleted the addition made by the Assessing officer. Hence, qua this ground, we uphold the order of the CIT(A)." Accordingly, we uphold the order of the Ld. CIT(A) and reject this ground of the Revenue. 9. Ground No. 2 relates to denial of exemption under section 54 by the Ld. AO which has been allowed by the Ld. CIT(A). The Ld. DR supported the order of the Ld. AO whereas the Ld. AR submitted that the solitary ground on which the Ld. AO di....