TaxTMI 
TaxTMI 
2024 (11) TMI 1303
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....nder "indexed cost of improvement") and offered the amount of Rs. 13,13,89,649/- to tax on account of Long Term Capital Gains (LTCG). 3. The Assessee had claimed the respective applicable amount as deduction u/s 24(b) of the Act and rest of the amount as indexed cost of improvement/acquisition. 4. Considering the case of the Assessee, the Assessing Officer (AO) framed two questions which are as under: i) Whether the interest paid is a cost of acquisition/improvement? ii) Whether the benefit of indexation is to be allowed to the interest cost? 5. The AO perused the provisions of section 55 of the Act and also reproduced in para 4.2 of the assessment order and after analyzing the provisions observed that the section 55 of the Act clearly says that the case of improvement means "all the expenditure of a capital nature incurred in making any additions or alternations to the capital asset by the Assessee after it became his property". The interest payment on housing loan cannot be said to be the expenditure of a capital nature incurred in making any additions or alterations to the capital asset by the Assessee after it became his property. 5.1 The AO further observed that it is ....
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....wnloaded from departmental portals and examined the issue under dispute in the light of the facts and circumstances of the case and relevant provisions of the statute and judicial precedent quoted by the appellant. 14.0 Briefly stated the facts of the case are that the assessee, Sri Neville Tuli, being an Individual, filed his return of income for the impugned AY 2013-14 electronically on 31.03.2015, declaring a total income of Rs. 13,48,94,830/-. Subsequently, the case was picked up for Scrutiny under CASS. Accordingly, the AO issued the statutory notices u/s. 143(2) and 142(1) of the Act to the assessee, calling for various details and documentary evidence. In response thereto, the assessee submitted the certain details and documentary evidences before the AO. After having considered the submissions made by the assessee, the AO framed the impugned assessment order u/s. 143(3) of the Act dated 30.03.2016, determining the total income of the assessee at Rs. 17,44,37,570/-. While doing so, the AO made a disallowance of Rs. 3,95,42,739/- against the claim of indexed cost of interest as deduction while computing the capital gains. Aggrieved with the decision of AO, the assessee file....
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....t paid on a housing loan for acquisition of the said property. A deduction was allowed by the department u/s 24(b) of the Income-tax Act in earlier AYs. Due to this, the AO disallowed the claim for deduction of the said interest while computing the capital gains of the current AY in the assessment order. Not satisfied with the AO's order, assessee contested the said order before CIT(A). The CIT(A) allowed the claim of the assessee stating that, the assessee is eligible to claim the deduction of interest u/s 48 of the Act, despite the fact that the same had been claimed and allowed u/s on 24(b). The Revenue pleaded before the ITAT that, once the assessee had availed of a deduction under section 24(6) for interest, he is not entitled to claim again a deduction of the same amount for the purposes of computation of Capital Gains u/s 48. The Hon'ble ITAT observed that there was no dispute about the fact that the interest in question was claimed and allowed as a deduction in the past in computing the income from house ante property under the statutory provisions of section 24(b). It further noted that the assessee had chosen to claim the said interest again as a deduction in comp....
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....decision. Captain B.L. Lingaraju v. ACIT [IT Appeal No. 906/Bang/2014]: Here in this case, the claim of the assessee for deduction under section 48 for the interest paid on a loan was disallowed by the AO on the ground that the said interest was allowed as deduction under section 24(b) in computing the income from house property. Later, the said action of the AO was upheld by the CIT in appeal. Not satisfied with the CIT(A) order, assessee approached the Hon'ble tribunal relying on several decisions of ITATs and Hon'ble HC of Madras. The Tribunal considered the facts and circumstances of the case along with the judgments and written submission and noted that the Court in the case of Sri Hariram Hotels (supra) had followed its earlier decision in the case of Maithreyi Pai(supra) to hold in Hariram Hotels case (supra), that an interest paid on borrowings for the acquisition of capital asset must fall for deduction under section 48 only if the same was not allowable as deduction under section 57 of the Act and that no assessee under the scheme of the Act could be allowed a deduction of the same amount twice over. Further, the Tribunal after analyzing the facts of Captain B. ....
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....Act by Finance Act, 2023 is coming into effect only from AY 2024-25. Further, the said amendment is not clarificatory in nature to apply retrospectively. Therefore, the explicit provisions of Sec.24(b) and Sec.48 as existed and applicable as on 31.03.2013 shall be applied while computing the capital gains by duly following the decisions of the jurisdictional ITAT which are binding on the CIT(A). Accordingly, the ground of appeal raised by the appellant is allowed. 20.0 In the result, the appeal filed by the assessee Sri Neville Tuli against the order u/s 143(3) for the AY 2013-14 is allowed." 7. The Revenue Department, being aggrieved, is in appeal before us and raised the sole ground of appeal which read as under: "Whether on the facts and circumstances of the case in law the Ld. CIT(A) is correct in allowing the indexed cost of interest paid in the Bank of Rs. 3,95,42,739/- for calculating the Long-Term Capital Gains on sale of the property by not considering the fact that the said interest amount was also claimed under section 24(b) of the I.T. Act, 1961 in the relevant years where in it was paid of." 8. We have heard the parties and perused the material available on recor....
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....rom the aforesaid observations of the AO and the Ld. Commissioner it shows without saying that the Assessee has not claimed any double deduction and even otherwise in the earlier assessment years the same deduction was claimed and has been allowed. 8.5 We further are also in agreement with the argument raised by the Ld. Senior Advocate that even otherwise before considering/calculating the capital gain, we should consider the provisions of section 48 of the Act, wherein the provision has been inserted in clause II vide Finance Act, 2023 and w.e.f. 01.04.2024, whereby it is provided that the cost of acquisition of the asset or the cost of improvement thereto shall not include the deductions claimed on the account of interest under clause (b) of section 24 or under the provisions of chapter VIA. And therefore for the period prior to that provision inserted and made applicable from 01.04.2024, no such restriction can be imposed and/or made applicable. 8.6 We observe that this particular amendment has been taken care of by the Ld. Commissioner, who by determining that the said amendment not being clarificatory in nature and therefore cannot be applied retrospectively. The Ld. Commiss....
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....and conclusion drawn by the Hon'ble High Court is reproduced herein below: "The Assessee had placed an order with a British concern for the purchase of machinery worth Rs. 48 lakhs. The British supplier required a guarantee to be given. The Allahabad Bank Ltd. agreed to be the guarantor for the sum of Rs. 48 lakhs for a consideration of Rs. 36,000 to be paid to the bank as guarantee commission. The Calcutta High Court held that this sum of Rs. 36,000 should be treated as part of the actual cost to the assessee of the new machinery acquired by it for the purpose of allowance of development rebate in terms of section 10(2)(vi)(b) of the Act. The reasoning of the High Court was that costs which were essentially necessary for a particular Assessee to incur for acquiring a capital asset should be included in this actual cost. In so holding, the Calcutta High Court followed a decision of the Bombay High Court in Habib Hussein v. Commissioner of Income-tax [1963] 48 ITR 859 875 (Bom.) in which it was held as follows: "The dictionary meaning of the word 'cost' is 'what is laid out or suffered to obtain anything'.... In our opinion, therefore, the meaning of the expressi....