AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 1686
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....ilee Hills, without appreciating the facts of the case and without taking into account the information already submitted before the AO in support of the computation during the course of original assessment which was also on record before him. 4. The ld. CIT(A) ought to have appreciated the fact that the loan obtained from India Bulls Finance Services Ltd. is directly attributable to the acquisition of property. 5. The ld. CIT(A) ought to have appreciated the fact that the AO erred in arriving at an amount of Rs. 85,78,937/- towards capital gains by not considering the expenditure of Rs. 51,52,554/- incidental to the acquisition of property shall be eligible for being capitalized and to be taken into account for cost of acquisition of the property. 6. The ld. CIT(A) ought to have appreciated the fact that the AO while computing capital gains, erred in not considering the incidental expenditure of Rs. 51,52,554/- incidental to the acquisition of property shall be eligible for being capitalized and to be taken into account for cost of acquisition of the property. 7. The ld. CIT (A) ought to have appreciated the fact that the AO erred while comp....
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....irectly attributable to purchasing the property at Road No. 36, Jubilee Hills. Further the contention of the assessee that the sale proceeds received in 2011 (on sale of this property) were paid directly by the purchaser M/s. Karam Chand Thapar & Bros. (Coal Sales) Ltd, Kolkata, to Indiabulls Finance Services Ltd, only show that the said loan amount was squared off. This payment, nowhere can be construed as evidence to claim that the loan from Indiabulls Finance Services Ltd. was utilized for purchasing of the property at Road No. 36, Jubilee Hills. 12. Assessee was required, vide order sheet dated 25.07.2017, to specifically furnish the evidences to establish that the loans from Indiabulls Finance Services Ltd were directly related to the cost of acquisition of the property. The assessee furnished release of title deeds dated 26.05.2011 and the letter dated 01.06.2011 of Indiabulls Finance Services Ltd. and title deed dated 11.09.2008, which does not in any way establish that the loan was utilized for purchasing this property. However, no specific evidence was submitted to establish that the loans were indeed directly related to the acquisition of the property at Road No.....
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.... Hon'ble Supreme Court which is discussed below: In CIT vs Attili Narayana Rao [233 ITR 10] AP [1998] the Hon'ble Andhra Pradesh High Court held that when the property was mortgaged to the government and was later sold by public auction the value of the property could be reduced to the extent of interest that was created in favour of the government by mortgage. Therefore, it was held that the capital gains are to be computed deducting the mortgage related expenses. This was subsequently overruled by the Hon'ble Supreme Court in CIT vs. Attili Narayana Rao 252 ITR 880 (SC) [2001]. The Hon'ble Apex court held that the dues to the mortgagee towards interest and other charges cannot be reduced from the capital gain that arose from the sale of the property. The relevant extract of the ratio of the Hon'ble Supreme Court is reproduced below: "5. We are of the view that the Tribunal and the High Court were in error. What was sold by the State at the auction was the immovable property that belonged to the assessee. The price that was realised therefore belonged to the assessee. From out of that price, the State deducted its dues towards "kist" and inter....
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....udes loan amount and interest thereon and therefore, there is a link between the cost of loan and the cost of acquisition. On the other hand, ld. DR had argued that the interest for which the assessee has claimed was a loan taken on the property and was not a loan taken to purchase the property. 8.1 The mode of computation provided under the Income Tax Act for the purposes of income chargeable under the head Capital Gain is deducting the full value of consideration received or accruing as a result of the transfer of capital asset from A) expenditure incurred wholly and exclusively in connection with such transfer, B) cost of acquisition of the asset and cost of improvement thereto. 8.2 The Assessing Officer and the ld. CIT(A) have neither disputed the expenditure incurred in connection with transfer of the capital asset nor they have disputed the cost of improvement thereof. 8.3 Both the lower authorities have disputed that the interest paid by the assessee would not be taken into account as cost of acquisition. Undisputedly, the assessee had purchased the property for a consideration of Rs. 6,31,47,000/-. The said sum was paid in three installments of Rs. 3.00 crores Rs. ....
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....y the assessee to M/s. India Bulls on pro rata amount for purchasing the property is required to be deducted while computing the capital gain and accordingly, we are of the opinion that the case of the Revenue is not at all maintainable and the assessee is entitled for the relief prayed for. In fact, in the matter of ACIT Vs. K.S. Gupta 119 ITR 372, Hon'ble Andhra Pradesh High Court held as under : "4. Against the decision of the AAC, the revenue took the matter in appeal before the Income-tax Appellate Tribunal and the assessee filed cross-objections supporting the order of the AAC. Before the Tribunal, the department's representative conceded that the interest of Rs. 11,344 paid by the assessee on borrowed funds from January 1,1957, to August 11,1966, was neither claimed by the assessee nor allowed by the department year after year. The Tribunal held that the amount of interest was included in the total cost of acquisition along with the original price of Rs. 9,138, and the Tribunal upheld the order of the AAC, dismissing the departmental appeal. Thereafter, at the instance of the revenue, the question herein-above set out has been referred to us for our opinion.....
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....to the State Excise Department as security for the amounts of kist due to the Government. The property so mortgaged was a house site of 5346 sq. yards situated near Waltair. The Government under section 69(1)(b) of the Transfer of Property Act sold the property in public auction without intervention of the Court and realised a sum of Rs. 5,62,980. Out of the said amount the Government has deducted a sum of Rs. 1,29,020 due to it towards arrears and interest and paid the balance to the assessee. The value of the house site as on 1-1-1964 was taken at Rs. 35 per square yard and the total value of the said site came to Rs. 1,87,010 and an amount of Rs. 5,000 was deducted from out of the total sale price while arriving at the gross total sale price. According to the revenue, capital gains should be computed at Rs. 3,70,970 (Rs. 5,57,980 - Rs. 1,87,010) while the assessee contended that the amount of Rs. 1,29,020 due to the State Excise Department is also to be deducted from Rs. 5,57,980 before computing the capital gains besides allowing deductions." 12. From the bare perusal of the facts, it is clear that the interest has to be paid by the assessee to the Excise Department out of t....