TaxTMI 
TaxTMI 
2023 (3) TMI 770
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....t is included in cost of acquisition. 3. On the facts and under circumstances of the case, ld. CIT(A) erred in deleting the basic cost of the flat of Rs.2,75,00,000/- restricted by the Assessing Officer and allowed the basic cost of Rs.2,79,96,771/-. 4. On the facts and under circumstances of the case, ld. CIT(A) erred in deleting the allowed interest of Rs.3,95,321/- made by the Assessing Officer and allowed interest of Rs.4,56,744/-." 3. Ground No.1 concerns disallowance of Rs.1,82,53,834/- towards interest from the cost of acquisition of the capital asset. 3.1 The assessee filed return of income for Assessment Year 2016-17 in question and inter alia claimed Long Term Capital Loss of Rs.5,34,61,155/- in its return. In the course of the assessment, the Assessing Officer noticed that the assessee has sold a penthouse situated at Omaxe the Forest, Noida during the year under consideration. The flat was originally acquired jointly by the husband of the assessee Late Shri Mahesh Aggarwal and the assessee as evidenced by allotments letter dated 21.12.2004 issued by the builder. The husband of the assessee expired and the ownership of the flat was transferred in August, 2010 in th....
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....yment which is also confirmed by the builder. The Assessing Officer however denied the enhanced cost and restricted the basic cost at Rs.2,75,00,000/-. The Assessing Officer further restricted the proportionate interest for delayed payments to builder from Rs.4,56,744/- claimed by the assessee to Rs.3,95,321/-. 3.3. The Assessing Officer further inter alia noted that the assessee has claimed Rs.1,35,930/- being loss towards stamp paper purchased in the name of husband who expired resulting in the impugned loss due to return of estamp paper. The Assessing Officer however denied the aforesaid amount for the purposes of determination of cost of acquisition. 3.4 As regards the interest on borrowed funds used for the acquisition of property amounting to Rs.1,82,53,834/-, the Assessing Officer contended that the aforesaid interest incurred for the purposes of acquisition or construction of house property needs to be claimed under Section 24 of the Act and does not qualify for deduction under Section 48 of the Act. In the wake of such adjustments to the cost of acquisition, the Long Term Capital Loss claimed by the assessee was restricted to Rs.2,08,46,527/- against the claim of Rs.5,34....
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....onstitutes the actual cost to the assessed of the land. The fact that the amount of Rs. 95,000.00 was paid by the assessed to the vendor and the amount of interest of Rs. 16,878.00 was paid to a different person, namely her mother-in-law, does not make any difference so far as the assessed is concerned in respect of the actual cost of the land to her It will not also make any difference whether the interest was paid on the date of the purchase or whether it is paid subsequently. To exclude the interest amount from the actual cost of the assets would lead to anomalous results. Supposing she had purchased the land for Rs.1,00,000.00 by raising a loan of that amount and had paid interest of Rs. 20,000.00 on the said loan and had sold the land for Rs. 1,20,000.00. It would be unreasonable to hold under such circumstances by excluding the interest amount from the actual cost of the land that she had made a capital gain of Rs. 20,000.00 when, as a matter of fact, she had not made any profit at all by the transaction. Applying the said observations of the Calcutta and the Bombay High Courts to the present case, we hold that the Tribunal was right in additing the interest amount of Rs. 16,....
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....cost of the assets/ property would lead to anomalous result. The interest amount should be definitely added to the actual cost of the property. Respectfully following these legal propositions and on basis of observations as held herein the addition on this account is deleted. 4. Ground No. 3, 4 & 5 are directed against disallowance of basic cost as Rs.2,79,96,771/- and has taken the basic cost as 2,75,00,000/- and disallowance of interest paid to the builder on the late payment. The assessee had claimed interest of Rs.4.56.744/- whereas the AO had allowed interest of Rs. 3,95,321/-. 4.1. On this ground, the AR of the appellant submitted as under: "The Ld AO had reduced the cost of the acquisition from Rs.2,79,96,770/- to Rs.2,75,00,000/-even though the confirmation of builder dated February 2016 was submitted. The ld AO had taken the cost as per allotment letter dated 21.12.2004 which is always a provisional allotment and which is subject to the changes. The assessee was originally allotted flat measuring 6500 sq. ft which was subsequently increased to 6610.84 sq ft. As alleged by the Ld AO there is no area written in the agreement to sell and further no sale deed was execute....
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....judgments as noted in earlier paragraphs. 7.2 We find that the reasons cited by the CIT(A) are sound and is in consonance with the judgment rendered by the Hon'ble High Courts as well as the Co-ordinate Bench of Tribunal. We thus see no reason to interfere. 7.3 Significantly, the Finance Bill, 2023 has proposed certain amendment in this regard. On a reading of the Finance Bill, it appears that as per the existing position of law, some assessee claims deduction towards interest paid on borrowed capital utilized for acquisition of the property under Section 24(b) of the Act. The same amount of interest is also being claimed under Section 48 of the Act as part of cost of acquisition. In order to prevent double deduction, the Finance Bill, 2023 has proposed to insert a proviso after clause (ii) of Section 48 so as to provide that cost of acquisition or the cost of improvement shall not include the amount of interest claimed under Section 24 of the Act. The amendment is proposed to take effect from Assessment Year 2024-25 prospectively. Thus, the proposed amendment in Section 48 to prevent double taxation makes the existing position of law loud and clear. As a corollary, as per the ex....