Case Law Details
Shree Bal Properties & Finance P. Ltd Vs PCIT (ITAT Mumbai)
Admittedly, the assessee while computing its income in the previous years under the head ‘Income from House Property‘ had claimed deduction u/s 24(b) of the interest paid on loan raised from ‘Janalaxmi Co-op Bank Ltd’, which funds are stated to have been utilized in construction of the property in question. In our considered view, there is substance in the view taken by the CIT(A) that now when the interest expenditure was allowed as a deduction to the assessee while computing its income under the head “Income from house property”, the same could not have thereafter been allowed as a deduction by allowing it to be capitalized as a part of the cost of acquisition while computing its income under the head “capital gains” at the time of sale of the property. In fact, a view to the contrary would lead to allowing of a deduction to the assessee twice.
Our aforesaid view is fortified by the judgment of the Hon’ble High Court of Karnataka in the case of CIT Vs. Maithreyi Pai [1985] 152 ITR 247 (Kar), wherein it was observed as under:
“The interest paid on borrowings for the acquisition of a capital asset must fall for deduction under s. 48. But, if the same sum is already the subject-matter of deduction under other heads like those under s. 57, we cannot understand how it could find a place again for the purpose of computation under s. 48. No assessee under the scheme of the IT Act could be allowed deduction of the same amount twice over. We are firmly of the opinion that if an amount is already allowed under s. 57 while computing the income of the assessee the same cannot be allowed as deduction for the purpose of computing the “capital gains” under s. 48.”
As such, now when the assessee in the case before us had claimed deduction of the interest paid to “Janalaxmi Co-op Bank Ltd” while computing its income for the previous years under the head “Income from House Property”, therefore, it would not be eligible to once again claim deduction of such interest expenditure in the garb of cost of acquisition of the property while computing the income under the head “Capital gains” at the time of sale of the property in question. Accordingly, finding no infirmity in the view taken up the CIT(A) in context of the issue under consideration, we uphold the same.
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