Shri T.S.Ramanan, Coimbatore V. ACIT, Coimbatore

ITA 2200/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0862 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Keywords: Capital asset; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH CHENNAI BEFORE DR. O. K. NARAYANAN, VICE PRESIDENT AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NO.2200/MDS/2012 ASSESSMENT YEAR : 2009-10 SHRI T.S. RAMANAN, GLO COLOR LABS, 115, CROSS CUT ROAD, GANDHIPURAM, COIMBATORE-641 012. V. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-II, COIMBATORE. (PAN :AAFPR1261F) (APPELLANT) (RESPONDENT) APPELLANT BY : MS. FARHA SULTANA, CA RESPONDENT BY : SHRI GURU BHASHYAM, SR. DR DATE OF HEARING : 19.0 2.2013 DATE OF PRONOUNCEMENT : 19.02.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(APPEALS)-I, COIMBATORE DATED 06-09-2012 FOR THE ASSESSMENT YEAR 2009-10. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE HAD PURCHA SED A LAND FOR A CONSIDERATION OF ` 1,09,05,900/- ON 01-09-2005. THE CONSIDERATION HAD BEEN PAID OUT OF BORROWED FUNDS O F ` 90,00,000/- ITA NO. 2200/MDS /2012 : 2 : FROM STATE BANK OF INDIA. THE ASSESSEE PAID INTERE ST ON BORROWED FUNDS OF ` 33,09,576/- FROM 01-09-2005 TO 25-03-2009. SUBSEQUENTLY THE ASSESSEE SOLD THE LAND FOR ` 2,40,00,000/- ON 25- 03-2009. THE ASSESSEE WHILE COMPUTING THE CAPITA L GAINS ON SALE OF LAND INTEREST PAID ON THE LOAN OF A SUM OF ` 33,09,576/- HAD BEEN TAKEN AS COST OF ACQUISITION AND INDEXED FOR CALCUL ATION OF CAPITAL GAIN. INDEXED VALUE OF INTEREST ON LOAN WAS ` 35,47,994/. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESS ING OFFICER OBSERVED THAT THE INTEREST ON BORROWINGS AFTER THE DATE OF ACQUISITION OF AN ASSET AND TILL THE DATE OF SALE, CANNOT BE TREATED AS THE COST OF ACQUISITION OF THE ASSET. HENCE THE CLAIM TOWARDS THE COST INDEXATION FOR THE 4 YEARS 2005-06 TO 2007-08 WAS DENIED. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A PPEALS). THE CIT(APPEALS) CONFIRMED THE ORDER OF THE ASSESSI NG OFFICER BY OBSERVING AS UNDER : ONCE THE ASSET IS ACQUIRED, THEN ANY EXPENDITURE INCURRED THEREAFTER CANNOT BE CONSIDERED AS THE COST OF ACQUISITION, SINCE SUCH EXPENDITURE WOULD NOT HAVE ANY NEXUS WITH THE ACQUISITION OF THE ASSET. THE ENTIRE SCHEME OF THE ACT REVEALS THAT THE INTEREST COMPONENT AFTER THE DATE OF ACQUISITIO N OF THE ASSET TILL THE DATE OF SALE CANNOT BE TREATE D AS COST OF ACQUISITION OF THE ASSET. 4. THE ASSESSEE HAS CARRIED THE MATTER BEFORE THE T RIBUNAL. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED B Y THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT V. SHRI C. ITA NO. 2200/MDS /2012 : 3 : RAMABRAHMAM IN ITA NO. 943/MDS/2012 DATED 31-10-201 2, WHEREIN THE TRIBUNAL ON SIMILAR ISSUE HAS HELD AS U NDER : 8. WE HAVE CONSIDERED SUBMISSIONS OF BOTH PARTIES AT LENGTH AND ALSO PERUSED THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AS WELL AS CIT(A). REGARDING THE ISSUE OF CAPITAL GAINS, IT TRANSPIRES THAT THERE IS HARDLY ANY DISPUTE THAT THE ASSESSEE HAD AVAILED THE LOAN FOR PURCHASING THE PROPERTY IN QUESTION. SINCE THE ASSESSEE HAD SHOWN THE INCOME UNDER THE HEAD HOUSE PROPERTY, HE PREFERRED TO RAISE THE CLAIM OF DEDUC TION UNDER SECTION 24(B) OF THE ACT, WHICH READS AS UN DER : (B) WHERE THE PROPERTY HAS BEEN ACQUIRED, CONSTRUCTED, REPAIRED, RENEWED OR RECONSTRUCTED WIT H BORROWED CAPITAL, THE AMOUNT OF ANY INTEREST PAYABL E ON SUCH CAPITAL. THERE IS NO QUARREL THAT SINCE THE ASSESSEES CLAIM OF DEDUCTION WAS UNDER THE STATUTORY PROVISIONS; THERE FORE, HE SUCCEEDED IN GETTING THE SAME. HOWEVER, AFTER T HE PROPERTY WAS SOLD, HE ALSO CHOSE TO INCLUDE THE INT EREST AMOUNT WHILE COMPUTING CAPITAL GAINS UNDER SECTION 48 OF THE ACT, WHICH READS AS UNDER: 48. THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED, BY DEDUCING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS, NAMELY:- (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO. AFTER PERUSING THE ABOVE SAID PROVISIONS, WE ARE OF THE OPINION THAT DEDUCTION UNDER SECTION 24(B) AND ITA NO. 2200/MDS /2012 : 4 : COMPUTATION OF CAPITAL GAINS UNDER SECTION 48 OF TH E ACT ARE ALTOGETHER COVERED BY DIFFERENT HEADS OF INCOME I.E., INCOME FROM HOUSE PROPERTY AND CAPI TAL GAINS. FURTHER A PERUSAL OF BOTH THE PROVISIONS M AKES IT UNAMBIGUOUS THAT NONE OF THEM EXCLUDES OPERATIVE OF THE OTHER. IN OTHER WORDS, A DEDUCTION UNDER SECTI ON 24(B) IS CLAIMED WHEN CONCERNED ASSESSEE DECLARES INCOME FROM HOUSE PROPERTY, WHEREAS, THE COST OF THE SAME ASSET IS TAKEN INTO CONSIDERATION WHEN IT IS S OLD AND CAPITAL GAINS ARE COMPUTED UNDER SECTION 48. W E DO NOT HAVE EVEN A SLIGHTEST DOUBT THAT THE INTERES T IN QUESTION IS INDEED AN EXPENDITURE IN ACQUIRING THE ASSET. SINCE BOTH PROVISIONS ARE ALTOGETHER DIFFER ENT, THE ASSESSEE IN THE INSTANT CASE IS CERTAINLY ENTIT LED TO INCLUDE THE INTEREST AMOUNT AT THE TIME OF COMPUTIN G CAPITAL GAINS UNDER SECTION 48 OF THE ACT. THERE FORE, THE CIT(A) HAS RIGHTLY ACCEPTED THE ASSESSEES CONTENTION AND DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. HENCE, QUA THIS GROUND, WE UPHO LD THE ORDER OF THE CIT(A). 5. ON THE OTHER HAND, THE LEARNED DR STRONGLY SUPPO RTED THE ORDER OF THE ASSESSING OFFICER. 6. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. NO MA TERIAL HAS BEEN BROUGHT TO OUR NOTICE TO SHOW THAT THE ORDER PASSED BY THE TRIBUNAL IN THE ABOVE CASE IS EITHER MODIFIED OR REVERSED BY THE HIGHER FORUM. WE THEREFORE RESPECTFULLY FOLLOWING THE DEC ISION OF THE CO- ITA NO. 2200/MDS /2012 : 5 : ORDINATE BENCH OF THIS TRIBUNAL ALLOW THE GROUND OF APPEAL RAISED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY, THE 19 TH OF FEBRUARY, 2013, AT CHENNAI. SD/- SD/- (DR. O. K. NARAYANAN) (V.DURGA RAO) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 19 TH FEBRUARY, 2013. H. COPY TO: ASSESSEE/AO/CIT(A)/CIT/D.R./GUARD FILE