2023 (11) TMI 701

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....s, in respect of the indexed cost of interest paid for the acquisition of the house property sold by the assessee, made by the Assessing Officer by travelling beyond the issue for which this case was selected for limited scrutiny under CASS is without jurisdiction. 2. The Ld. Commissioner of Income Tax (Appeals) has eared is not allowing the deduction of Rs. 24,38,826/- u/s 48(ii) from the Long Term Capital Gains in respect of the indexed cost of interest of Rs. 18,33,363/- paid for acquisition of the house property sold by the assessee. 3. The assessee craves leave to add, to modify to delete or to amend any or all of the above grounds of appeal." 3. The appellant also raised the following additional grounds of appeal ....

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....ions. 3. The appellant may please be allowed to add/alter/amend any grounds of appeal." 4. Briefly, the facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of owning, operations conducting hotels, motels, loading and boarding Mangal Karyalaya etc. The Return of Income for the assessment year 2015-16 was filed on 20.09.2015 declaring Rs. Nil income. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-12(2), Pune ('the Assessing Officer') vide order dated 28.11.2017 passed u/s 143(3) of the Income Tax Act, 1961 ('the Act') at a total income of Rs. 41,68,080/-. While doing so, the Assessing Offic....

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....d by the above addition, an appeal was filed before the NFAC contending that the appellant company had incurred the expenditure of Rs. 45,56,780/- on the loans obtained for acquisition of these two flats and, therefore, the indexed cost of such expenditure should be allowed as deduction while computing the capital gains relying on the following decisions :- (i) CIT vs. Hariram Hotels (P) Ltd., 2010 TaxPub (DT) 1093 (Karn-HC). (ii) CIT vs. Mithlesh Kumari, 92 ITR 9 (Del). (iii) Addl.CIT vs. KS Gupta, (1976) 44 CCH 0522 APHC. (iv) Gayatri Maheshwari vs. ITO, ITA No.208/JODH/2017. (v) ACIT vs. Mrs. Sheela Chopra, ITA No.169/KOL/2014. 6. However, the NFAC rejected the submissions of the appellant ....

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....solitary issue that arises in the present appeal is with regard to allowability of the indexed cost of interest expenditure incurred on loans borrowed for acquisition of two flats which are sold during the year while computing the gains arising on sale offered to tax under the head "capital gains". The assessment order is silent as to the allowability or otherwise as to why this indexed cost of interest expenditure on loans borrowed cannot be allowed as deduction. However, the appellant had claimed deduction towards interest expenditure while computing the capital gains on sale of said two flats. The NFAC placing reliance on the decision of the Hon'ble Supreme Court in the case of Tata Iron & Steel Co. (supra) had confirmed the disallowance....