Shri Ashokkumar S.Vaswani, Ahmedabad V. The Dy.CIT.,Circle-2, Ahmedabad

ITA 1528/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9401 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 11-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KETAN H SHAH
• Keywords: Capital asset; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO.1528/AHD/2012 (ASSESSMENT YEAR:2 008-09) SHRI ASHOKKUMAR S. VASWANI C/O. KETAN H. SHAH, ADVOCATE 903, SAPPHIRE COMPLEX, C.G. ROAD, NAVRANGPURA, AHMEDABAD APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 2, AHMEDABAD RESPONDENT PAN: AAOPV6849A /BY ASSESSEE : SHRI KETAN H. SHAH, A.R. /BY REVENUE : SHRI JAMES KURIAN, SR. D.R. /DATE OF HEARING : 13.01.2017 /DATE OF PRONOUNCEMENT : 24.01.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2008-09 ARISES AGAINST CIT(A)-6, AHMEDABADS ORDER DATED 11.06.2012 IN APP EAL NO. CIT(A)- VI/DCIT.CIR.2/294/10-11 UPHOLDING ASSESSING OFFICER S ACTION DISALLOWING INTEREST OF RS.5,21,584/- CLAIMED AS COST OF ACQUIS ITION OF THE CAPITAL ASSETS IN ITA NO. 1528/AHD/2012 ( SHRI ASHOKKUMAR S. VASWANI VS. DCIT) A.Y. 2008-09 - 2 - QUESTION, IN PROCEEDINGS UNDER SECTION 143(3) OF TH E INCOME TAX ACT, 1961; IN SHORT THE ACT. WE HAVE HEARD BOTH THE PARTIES. CASE FILE PERUSED . 2. THERE IS NO DISPUTE SO FAR AS RELEVANT FACTS ARE CONCERNED. THIS ASSESSEE SOLD SIX CAPITAL ASSETS IN THE NATURE OF I MMOVABLE PROPERTIES IN THE RELEVANT PREVIOUS YEAR GIVING RISE TO SHORT TERM CA PITAL GAINS. THE ASSESSEES SHORT TERM CAPITAL GAINS COMPUTATION CLAIM INTEREST AMOUNT IN QUESTION OF RS.5,21,584/- AS TO HAVE BEEN INCURRED ON FUNDS BOR ROWED FOR ACQUISITION OF THE ABOVE ASSETS. THE ASSESSING OFFICER WAS FAIR E NOUGH IN NOT DISPUTING DIRECT NEXUS BETWEEN ASSESSEES BORROWED FUND AND T HE ASSETS ACQUIRED FOLLOWED BY SALE THEREOF IN THE RELEVANT PREVIOUS Y EAR. HE HOWEVER DECLINED ASSESSEES INTEREST CLAIM U/S.48 OF THE ACT THAT TH E SAME NOWHERE POSTULATES SUCH A DEDUCTION SINCE COST OF INTEREST ON BORROWED FUNDS USED FOR ACQUIRING THE IMPUGNED CAPITAL ASSET CANNOT BE TAKEN TO BE CO ST OF ACQUISITION OF ASSET. 3. THE ASSESSEE PREFERRED APPEAL. HE QUOTED VARIOU S JUDGMENTS I.E. CIT VS. MITHILESHKUMARI (1973) 92 ITR 9 (DELHI) HOLDING THAT SUCH AN INTEREST CLAIM IS IN THE NATURE OF COST OF ACQUISITION. HIS SECOND PRECEDENT WAS ADDL.CIT VS. K. S. GUPTA (1979) 119 ITR 372 (AP) AN D CIT VS. K. RAJA GOPALA RAO (2001) 252 ITR 459 (MAD). LATTER TWO AB OVE STATED DECISIONS MAINLY RELIED UPON HONBLE APEX COURTS DECISION IN CHALLAPALLI SUGARS LTD. VS. CIT (1975) 98 ITR 167 (SC) THAT ALTHOUGH THE PR OVISIONS IN ACT DID NOT SPECIFY ACTUAL COST, THE SAME HAS TO BE CONSTRUED I N THE SENSE THAT NO COMMERCIAL MAN WOULD MISUNDERSTAND. THEIR LORDSHIP S OBSERVE IN OTHER WORDS THAT THE SAID TERM HAS TO BE INTERPRETED IN A CCOUNTANCY PARLANCE IN COMMERCE AND INDUSTRY. LD. CIT(A) STILL UPHOLDS AS SESSING OFFICERS OPINION. HE FIRST OF ALL OBSERVES THAT THE ABOVE N ON JURISDICTIONAL HIGH COURTS DECISION ARE NOT BINDING AS PER THIS TRIBUNAL CO-OR DINATE BENCH DECISION IN ITA NO. 1528/AHD/2012 ( SHRI ASHOKKUMAR S. VASWANI VS. DCIT) A.Y. 2008-09 - 3 - ITO VS. VIKRAM SADANAND HOSKOTE CASE [2007] 18 SOT 130 (MUMBAI) DECIDING THE VERY ISSUE IN REVENUES FAVOUR BY ADOP TING THE ABOVE REASONING. HE THEN CONCLUDES THAT ALL THE ABOVE STATED PRECEDE NTS ARE OF NON JURISDICTION HIGH COURT AND PERTAIN TO INCOME TAX ACT IN ITS EAR LIER AVTAR OF 1922. THIS LEAVES THE ASSESSEE AGGRIEVED. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL SUBMISSIONS. THE QUESTION BEFORE US AS TO WHETHER COST OF ACQUISITIO N OF A CAPITAL ASSET U/S.48 CLAUSE (II) INCLUDES INTEREST AMOUNT QUA THE BORROW ED FUNDS USED FOR PURCHASING THE SAME. AND MORE PARTICULARLY IN CASE WHEN THERE IS NO DISPUTE ABOUT DIRECT NEXUS THEREOF AS THE FACT OF INSTANT C ASE. THERE IS NO DISPUTE THAT PROVISIONS IN THE ACT NOWHERE PROVIDE SPECIFIC DEFI NITION OF THE COSTS INCURRED OR TO BE TAKEN IN COMPUTING CAPITAL GAINS. THERE IS FURTHER NO QUARREL THAT ALL THE ABOVE STATED DECISIONS DECIDE THE VERY ISSUE AGAINST THE REVENUE. THE CIT(A)S CASE ON THE OTHER HAND IS THAT THEY PE RTAIN TO THE OLD ACT. WE FIND THAT THE SAME IS FACTUALLY INCORRECT AT LEAST SO FAR AS HONBLE ANDHRA PRADESH AND MADRAS HIGH COURTS DECISIONS ARE CONCE RNED. IT IS FURTHER EVIDENT TO US THAT THEIR LORDSHIPS OF THE APEX COUR T IN CHALLPALLI SUGARS (SUPRA) HAD RATHER EXAMINING THE VERY ISSUE PERTAINING TO C OST OF FIXED ASSETS TO INCLUDE SIMILAR COST OF INTEREST. LEARNED DEPARTME NTAL REPRESENTATIVE FAILS TO REBUT THIS FACTUAL POSITION. WE FURTHER NOTICE THA T THIS TRIBUNAL CO-ORDINATE BENCH DECISION IN ACIT VS. AURANGABAD HOLIDAY RESOR TS (P) LTD. (2007) 118 ITD 1 (PUNE) RELIES UPON HONBLE BOMBAY HIGH COURT S DECISION IN CIT VS. SMT. GODAVARIDEVI SARAF (1978) 113 ITR 589 (BOM.) T O HOLD THAT EVEN JUDGMENTS OF HONBLE NON JURISDICTIONAL HIGH COURTS BIND THIS TRIBUNAL. THE CIT(A)S LATTER REASON(SUPRA) THUS HAS NO MERIT. W E ARE THEREFORE OF THE OPINION THAT LD. CIT(A)S REASONING NARRATED IN PRE CEDING PARAGRAPHS IS NOT SUSTAINABLE. ITA NO. 1528/AHD/2012 ( SHRI ASHOKKUMAR S. VASWANI VS. DCIT) A.Y. 2008-09 - 4 - 5. IT IS FURTHER EVIDENT TO US THAT SECTION 48(II) OF THE ACT SPECIFICALLY POSTULATES COST OF ACQUISITION OF THE ASSET INSTEAD OF MERE COST OF THE ASSET FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. WE REITERA TE TRITE PROPOSITION OF LAW THAT EXPRESSIONS USED IN A FISCAL STATUTE ARE TO BE INTERPRETED WITHOUT SUPPLYING ANY FURTHER EMPHASIS AND MORE SO WHEN THE RE IS NO ANY AMBIGUITY THEREIN. WE THUS ADOPT LITERAL INTERPRETATION OF T HE ABOVE CLAUSE TO CONCLUDE THAT COST OF ACQUISITION OF THE ASSET INCLUDES ASSE SSEES INTEREST COST AS WELL SINCE INCURRED ON FUNDS BORROWED FOR THE PURPOSE OF ACQUISITION OF THE CAPITAL ASSET SOLD HAVING DIRECT NEXUS WITH THE SAME. THE ASSESSEES SOLE SUBSTANTIVE GROUND RAISED IN THE INSTANT APPEAL IS ACCEPTED. 6. THIS ASSESSEES APPEAL IS ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF JANUARY, 2017.] SD/- SD/- ( PRAMOD KUMAR ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 24/01/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE 3 ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . // . /0