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TMI Blog2015 (6) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... d Shri Chandra Poojari JJ. For the Appellant : Shri Neil Philip - DR For the Respondent : Ms. Mrugakshi Joshi ORDER Per Chandra Poojari, A.M: This appeal by the revenue is directed against the order dated 10/12/2012 passed by the ld. CIT(A) for the assessment year 2007-08. The first issue for our consideration is as follows:- Ground No.1 and 2 . i) The Learned CIT(A) has erred on facts and in law, in directing the Assessing Officer to allow the capitalization of interest expenditure of ₹ 42,25,030/- without properly appreciating the factual and legal matrix as clearly brought out by the Assessing Officer. ii) The Learned CIT(A) has erred on facts and in law in directing the Assessing Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1 On appeal CIT(A) allowed the ground of the assessee by observing that the interest expenditure is related to acquisition of 45 shares of M/s. Merino Homeland Pvt. Ltd. He observed that the AO had admitted that such shares had been acquired by the assessee by utilizing borrowed fund. He further observed that since there is direct nexus of corporate loans with acquisition of shares, such expenditure would add to the cost of shares. He observed that the AO has wrongly presumed that such expenditure is not to be capitalized and was of the opinion that the arguments of the AO were not tenable, when no such expenditure can be claimed as Revenue expenditure, same is also not liable for disallowance u/s. 14A read with rule 8D. Thus, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions which are allowable are - (1) the cost of acquisition of the asset, (2) the cost of any improvement thereto and (3) expenditure incurred wholly and exclusively in connection with the transfer of the asset. The cost of acquisition, in our opinion, means the amount paid for acquiring the asset. Once the asset is acquired, then any expenditure incurred thereafter cannot be considered as the cost of acquisition, since such expenditure would not have any nexus with the acquisition of the asset. Wherever the Legislature intended to allow such expenditure as deduction, it had specifically provided so under various heads. For example, in computing the income from house property, the assessee is allowed deduction under section 24 of the Act on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome under the head Income from other sources , even where the dividend is not received in a particular year. If this is the legal position, then we are afraid, how the interest paid by the assessee can be considered as part of the cost of acquisition of the shares. If the contention of the assessee is accepted then it would amount to allowing double deduction i.e., under section 57 as well as under section 48 of the Act, which can never be the intention of the Legislature. As already stated, the double deduction is prohibited as laid down by the Hon'ble Supreme Court in the case of Escorts Ltd. (supra). The entire scheme of the Act, therefore, reveals that interest component after the date of acquisition and till the date of sale canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of fixed assets is to include all expenditure necessary to bring such assets into existence and to put them in working condition. In case money is borrowed by a newly started company which is in the process of constructing and erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalised and added to the cost of the fixed assets. 4.4 A bare look at the above observations reveals that actual cost would include all expenditure necessary to bring the assets into existence and put them in working condition. Nowhere in the above observations, the Hon ble Supreme Court held that the expenditure incurred after the acquisition of asset would be included in the cost of assets. The t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vertising Pvt. Ltd. ITA No.2750/Del./2011 order dated 21/9/2012 for assessment year 2007-08; 6. Modern Info Technology P. Ltd. vs. ITO in ITA No.4294/Mum/2012 order dated 19/10/2012 for assessment year 2009-10 and 7. Daga Global Chemicals Pvt. Ltd. vs. ACIT ITA No.5592/Mum/2012 order dated 01/01/2015 for assessment year 2009-10 4.6 In our opinion in view of the judgment of Hon'ble Supreme Court in the case of Chellapally Sugars Ltd. cited supra, we are inclined to not follow above judgments cited by the ld. AR . Accordingly, this ground is rejected. 5. Next ground that we take is ground No.3 which reads as follows:- The ld. CIT(A) has erred on facts and law, in deleting the disallowance of expenditure of ₹ 16,77,597/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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