Kailash CHand Rohani, New Delhi V. ITO, Ward- 54(1), New Delhi

ITA 6746/DEL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5566 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 08-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Capital asset; Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER ITA NO.6746/DEL/2017 ASSESSMENT YEAR : 2014-15 KAILASH CHAND ROHANI, C/O. R.B. ARORA & CO., CAS, DSM- 127, DLF TOWERS, SHIVAJI MARG, MOTI NAGAR, NEW DELHI. VS. ITO, WARD- 54(1), NEW DELHI. PAN : ADRPR5375H (APPELLANT) (RESPONDENT) ASSESSEE BY : DR. RAKESH GUPTA, ADV. SHRI SOMIL AGARWAL, ADV. DEPARTMENT BY : MS. ASHIMA NEB, SR.DR DATE OF HEARING : 04-04-2018 DATE OF PRONOUNCEMENT : 13-04-2018 O R D E R PER R. K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 28.09.2017 OF THE CIT(A)- 18, NEW DELHI RELATING TO ASSESSMENT YEAR 2014-15. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 20.08.2014 DECLARING TOTAL INCOME OF RS.11,24,560/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SOLD A PROPERTY AND DECLARED NIL CAPITAL GAIN. ON BEING QUESTIONED BY THE ASSESSING OFFICER, IT WAS EXPLAIN ED THAT THE ASSESSEE HAS PURCHASED A PROPERTY BEARING PROPERTY NO.B-504, DEV RATANA-II, GANDHI NAGAR, AHMEDABAD DURING THE YEAR 2010-11 BY AVAILING LOAN FROM INDIA INFO LINE 2 ITA NO.6746/DEL/2017 HOUSING FINANCE LTD. AMOUNTING TO RS.30,54,000/-. THE ASSESSEE HAS ALSO PAID REGISTRATION FEE ETC AND HAS PAID INTEREST ON LOAN. THE PROPERTY WAS SOLD FOR A CONSIDERATION OF RS.54,00,000/-. AFTER CLAIMING IN DEXED COST OUT OF THE SALE CONSIDERATION, THE ASSESSEE DECLARED LOSS OF RS.4,0 9,628/-. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WHILE CLAIMING T HE COST OF ACQUISITION HAS INCREASED THE INTEREST ELEMENT ALSO WHICH ACCORDING TO HIM IS NOT CORRECT. REJECTING THE VARIOUS EXPLANATION GIVEN BY THE ASSE SSEE, THE ASSESSING OFFICER DETERMINED THE TOTAL CAPITAL GAIN AT RS.13,81,719/- . 3. IN APPEAL, THE LD. CIT(A) GAVE PARTIAL RELIEF TO THE ASSESSEE. 4. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUND S :- 1. THAT OF THE LD. CIT (APPEALS) ERRED BOTH IN LAW AS WELL AS IN FACTS OF THE CASE IN UPHOLDING THE VIEW POINT OF ASSESSING OFFICER TH AT APPELLANT WAS NOT ELIGIBLE TO BENEFIT TO INDEXATION ON AMOUNT OF INTEREST PAID TO FINANCIAL INSTITUTION ON LOAN TAKEN FOR PURCHASE OF PROPERTY. 2. THAT THE LD. CIT HAD ERRED BOTH IN LAW AS WELL A S IN FACTS OF THE CASE IN TRAVELLING OUTSIDE THE SCOPE OF APPEAL WITHOUT GIVI NG PROPER OPPORTUNITY BEING HEARD FOR HIS PROPOSED ACTION OF DECLINING BENEFIT OF IND EXATION, ON INTEREST AMOUNT PAID TO FINANCIAL INSTITUTION. 3. THAT THE LD. CIT (APPEALS) HAD ERRED BOTH IN LAW AS WELL AS IN FACTS OF THE CASE IN NOT CONSIDERING THE FACT THAT AO HAD ALSO COMMIT TED ARITHMETICAL ERROR WHILE CALCULATING INDEXED COST OF ACQUISITION/IMPROVEMENT FOR CALCULATING FIGURE OF CAPITAL GAINS. THE APPELLANT CRAVES LEAVE OF THIS HONORABLE COURT TO ADD, AMEND, SUBSTITUTE OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF ARGUMENTS. 5. AFTER HEARING BOTH THE SIDES, I FIND THE ONLY IS SUE TO BE DECIDED IN THE IMPUGNED APPEAL IS REGARDING THE BENEFIT OF INDEXAT ION OF AMOUNT OF INTEREST PAID TO THE FINANCIAL INSTITUTION ON LOAN TAKEN FOR PURCHASE OF PROPERTY. I FIND 3 ITA NO.6746/DEL/2017 THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MITHLESH KUMARI REPORTED IN 92 ITR 9 HAS HELD THAT THE INTEREST PAID ON AMOU NT BORROWED FOR PURCHASING OF OPEN PLOT OF LAND FORMS PART OF COST OF ACQUISIT ION. THE HON'BLE HIGH COURT HAS HELD THAT IT WILL NOT MAKE ANY DIFFERENCE AS TO WHETHER THE INTEREST WAS PAID ON THE DATE OF PURCHASE OR WHETHER IT IS PAID SUBSE QUENTLY. TO EXCLUDE THE INTEREST AMOUNT FROM THE ACTUAL COST OF THE ASSET W OULD LEAD TO ANOMALOUS RESULTS. 6. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. K. RAJA GOPALA RAO REPORTED IN 252 ITR 459 HAS HELD THAT MORTGAGE EXPENSES INCURRED IN CONNECTION WITH THE ACQUISITION OF THE PROPERTY AND THE INTEREST PAYABLE ON THE MORTGAGED AMOUNTS WHICH HAVE BEEN UTILIZED AS PART OF THE CONSIDERATION, WOULD FORM PART OF THE COST OF ACQUISITION OF THE PROPERT Y FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. 7. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. VS. SRI HARIRAM HOTELS (P) LTD. REPORTED IN 325 ITR 136 HAS HELD THAT INTEREST ON LOAN TAKEN FOR PURCHASE OF PROPERTY HAS TO BE INCLUDED I N THE COST OF PROPERTY FOR COMPUTING CAPITAL GAIN ON THE SALE OF THE SAID PROP ERTY EVEN THOUGH SUCH INTEREST WAS NOT PAID TILL THE TIME THE PROPERTY WAS SOLD. 8. THE JODHPUR BENCH OF THE TRIBUNAL IN THE CASE OF GAYATRI MAHESHWARI VS. ITO REPORTED IN 187 TTJ 33 HAS HELD THAT THE ASSESS EE IS ENTITLED TO INCLUDE INTEREST PAID ON HOUSING LOAN FOR COMPUTATION OF CA PITAL GAIN U/S 48 DESPITE FACT 4 ITA NO.6746/DEL/2017 THAT THE SAME HAD BEEN CLAIMED U/S 24B WHILE COMPUT ING THE INCOME FROM HOUSE PROPERTY. THUS, INTEREST PAID TO BANK FOR AC QUIRING CAPITAL ASSET WOULD BE ELIGIBLE AS PART OF COST OF ACQUISITION. THE VARIO US OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORT THE C ASE OF THE ASSESSEE. IN VIEW OF THE ABOVE, I HOLD THAT THE ASSESSEE IS ENTITLED TO BENEFIT OF INDEXATION ON THE AMOUNT OF INTEREST PAID TO THE FINANCIAL INSTITUTIO N ON THE LOAN TAKEN FOR PURCHASE OF THE PROPERTY. THE GROUNDS RAISED BY TH E ASSESSEE ARE ACCORDINGLY ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH APRIL, 2018. SD/- (R. K. PANDA) ACCOUNTANT MEMBER DATED: 13-04-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI