Interest on borrowed capital

Anuraag Sharma (Sr Executive Finance) (835 Points)

22 May 2009  

Whether interest on borrowed capital a part of cost of acquisition of a capital asset???

 

If yes..then refer this query....

 

An individual Assessee borrows fund for aperiod of 5 years for purchasing a house property which is to be used by him for his own residence

 

It avails deduction of interest paid on such borrowed under section 24...

 

In seventh year(from the date of acquiistion of property)...it "transferred" its house falling u/s 2(47) and gains some profit on its transfer

Now he added the interest paid(total) into the cost of acquisition of asset....

 

In this way he enjoys double benefit one by caliming deduction u/s 24 and another by reducing his tax liability arising on tarnsfer of a capital asset.....

 

Is this correct??Plaese guide reagrding this...??