Capitalisation of interest on loan for fixed assets

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AZAD BHALLA (Querist)
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06 February 2015 Please clarify : If an Individual businessman has purchased a Commercial Shop by taking loan in business from bank and he capitalises the yearly interest to Shop Cost. After 7 years he sells that shop on a premium price, now my question is that whether the interest added to cost of shop will be considered in purchase cost while calculating Long Term Capital Gain or not. Also if we charge the interest as Revenue Expenditure, is it allowed or not.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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06 February 2015 Interest added to shop cost will not considered in purchase cost for long term capital gain. It will be allowed only as revenue expenditure.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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06 February 2015 the yearly interest paid is not to be capitalised but needs to be expensed in profit and loss a/c and will not be considered for cal capital gains

Rupesh Jain

Rupesh Jain (Expert)
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06 February 2015 yearly intt on loan amont will not capitalization only principal loan part will add in the shop cost.

AZAD BHALLA

AZAD BHALLA (Querist)
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07 February 2015 Thanks All for their replies.

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