LTCG house property

177 views 2 replies
User Avatar

3 Points Joined May 2022
sir
whether the amount of interest paid on borrowed capital on acquisition will come under Cost of Acquisition.
Any case laws are there to substantiate the issue.
0 Reply Share Follow
On 08 December 2024 at 19:53 Report
Replies (2)
User Avatar

Master in Accounts & high court Advocate
9434 Points Joined December 2011

The amount of interest paid on borrowed capital for acquisition can indeed be considered as part of the Cost of Acquisition.

This is supported by various case laws. -

In the case of CIT Vs. K. Raja Gopala Rao (2001 252 ITR 459 Mad), the court ruled that interest paid on borrowed capital for acquiring a property is considered part of the actual cost of acquisition.

Similarly, in the case of Trishul Investments Ltd. (305 ITR 434 Madras), the Madras High Court held that interest paid for acquiring shares would partake the character of cost of shares and can be capitalized along with the cost of acquisition for computing capital gains.

Another case, ACIT vs C. Ramabrahmam (ITA No.943/Mds/2012), also supports this view, stating that deduction under section 24(b) and computation of capital gains under section 48 are covered under different heads of income, and thus, interest paid on borrowed capital can be claimed as part of the cost of acquisition

 However, it's essential to note that there are conflicting judicial views on this matter. For instance, the Bangalore Tribunal in the case of Captain BL Lingaraju vs ACIT (ITA No. 906/Bang/2014) held that interest paid on borrowed capital cannot be claimed as part of the cost of acquisition if it has already been allowed as a deduction under other heads.

Reply
On 08 December 2024 at 21:35
User Avatar

3 Points Joined May 2022
Thank you sir
Reply
On 11 December 2024 at 09:56


CCI Pro

Leave a Reply

Post Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Recent Threads

More recent discussions | Post

Related Threads
Loading