As 16 borrowing costs

This is because preference share capital is not a borrowing. Its an Equity (with some preferential treatment). 

Only borrowing costs paid on borrowings can be capitalised under AS 16. (eg. Loans, debentures, bonds, etc)

Preference dividend is not an expenditure or cost. Its only an appropriation of profits. If there is no profits, then usually no pref dividend is paid. Hence it cannot be termed as a borrowing cost and accordingly cannot be capitalised with qualifying assets.