S.I. Media LLP Vs DCIT (ITAT Bangalore)
ITAT Bangalore held that interest on housing loan is allowed to be included in cost of acquisition of capital asset under section 48 of the Income Tax Act provided the same is not claimed as deduction u/s. 24(b). Accordingly, matter restored back to AO for verification.
Facts- The assessee in the present case is a partnership firm engaged in the activity of entertainment and related services. The assessee in the year under consideration has shown a loss under the head “capital gain” amounting to ₹4,84,01,053 on the sale of property. However, such loss was disallowed by the AO, treating the impugned loss as non-genuine on the grounds that the assessee had sold the property to the son of one of the partners.
CIT(A) held that the said transaction to the son of the partner was genuine and therefore the same could not be treated as bogus. However, while dealing with the issue on hand, CIT(A) observed that the assessee had claimed deduction for the amount of ₹2,25,76,076 – indexed cost of ₹2,51,20,901 representing the interest on the borrowed money which was claimed as deduction against the sale consideration of the property. As per CIT(A), the impugned capital asset was shown as investment in the firm and therefore the assessee was not entitled to the interest paid on the loan taken for the purchase of the capital asset in dispute. Accordingly, CIT(A) disallowed the claim of the deduction of the assessee for ₹2,51,20,901 representing the indexed cost of interest.
