Sh. Subhash Bana Vs. ACIT (ITAT Delhi)
Deduction u/s. 24(b) and computation of capital gains u/s 48 were altogether covered by different heads of income i.e., income from ‘house property’ and ‘capital gains’. None of them excludes operation of the other. The interest in question was indeed expenditure in acquiring asset. Since both provisions were altogether different, assessee was entitled to include interest paid on housing loan for computation of capital gains u/s 48 despite the fact that same had been claimed u/s 24(b) while computing income from house property.
FULL TEXT OF THE ITAT JUDGMENT
The present appeal has been filed by assessee against order dated 20/11/14 passed by Ld.CIT(A) for assessment year 2011-12 on the following grounds of appeal:
“1. That Order of the Learned Income Tax Officer is wrong and bad in law to the extent of addition made to the income of the Assessee, and the Learned Commissioner of Income Tax (Appeal) has also erred while confirming the additions as per the grounds following.
2. That the Learned Assessing Officer has erred both in fact and in law while disallowing claim of assessee of Rs. 16,27,671/- as per original return submitted (stated as Rs. 6,66,7661- in the assessment order) on account of interest capitalized and added to the cost of property sold, before indexing and arriving at the indexed cost of property while computing the Long Term Capital Gain and that indexation should have been applied to interest as well, and the Learned Commissioner of Income Tax (Appeal) has also erred while confirming the additions.
3. The Learned Assessing Officer has erred both in fact and law while disallowing Rs. 13,79,256/- being construction cost (cost of improvement, i.e. wood work, electric and plumbing etc.) of the new flat, necessary to make the flat livable, for claiming exemption U/S 54 from the Long Capital Gain.
4. That each Ground of Appeal is independent of each other.
5. That the Ass essee craves leave to add to or amend any ground of appeal at any time before or during the course of hearing.”
2. Brief facts of the case are as under:
The assessee filed his return of income on 28/07/11 declaring a total income of Rs.1,80,90,075/-. The case was selected for scrutiny and notice under section 143(2) of the Act was issued along with notice under section 143(1) and questionnaire. In response to the statutory notices, representative of assessee appeared before Ld. AO and filed all necessary details/information as called for. Ld. AO from the return of income observed that assessee has claimed exemption under section 54 on account of capital gain resulting from sale of residential house. During the course of assessment proceedings assessee was asked to submit the details of capital gain.
2.1. Assessee submitted that during the year under consideration it had sold the property at 803, Laural apartment, 50-60 CPA Ramaswamy Road, Alwarpet, Chennai on 30/09/10. Assessee further submitted that out of the sale consideration assessee purchased a new property at 112A Raheja Atlantis, sector 31-32, Gurgaon, Haryana on 10/12/2010.
2.2. It was further observed that assessee computed indexed cost of acquisition as under:
Indexed cost of acquisition
