ACIT Vs Smt. Sadhna Aggarwal (ITAT Delhi)
The ITAT Delhi adjudicated the Revenue’s appeal against the order of the CIT(A), which had deleted various disallowances made while computing the assessee’s long-term capital loss on sale of a residential property. The principal issue was whether interest paid on borrowed funds used for acquiring the property formed part of the cost of acquisition under Section 48 of the Income-tax Act. The Assessing Officer had disallowed the interest on the ground that it was allowable only under Section 24 and not under Section 48.
The CIT(A) held that the housing loan was directly utilized for acquiring the property and that the interest paid constituted part of its actual cost. Relying on judicial precedents, the CIT(A) also accepted the enhanced purchase cost arising from an increase in the flat’s area, the interest paid to the builder for delayed payment, and the loss on stamp papers purchased specifically for registration of the property, treating all these expenses as part of the cost of acquisition.
The Tribunal found the reasoning of the CIT(A) consistent with the decisions of the jurisdictional High Court and other judicial precedents. It also noted that the proposed amendment in the Finance Bill, 2023 restricting inclusion of interest already claimed under Section 24 in the cost of acquisition under Section 48 was prospective from Assessment Year 2024-25, indicating that the existing legal position permitted such inclusion. The Tribunal further held that the enhanced cost reflected the actual area ultimately allotted to the assessee, the builder had confirmed the additional payments, and the stamp paper loss was directly attributable to acquisition of the property. Accordingly, the Tribunal found no infirmity in the CIT(A)’s order, dismissed all the Revenue’s grounds, and dismissed the appeal.
