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TMI Blog2011 (11) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has returned short-term capital gains. These short-term capital gains have accrued to the assessee on account of purchase and sale of securities/units of mutual fund. The AO, while going through the portfolio and the ingredients of short-term capital gains, further noted that in respect of certain shares, the assessee has acquired these through the IPO Mechanism i.e. through the primary market. Out of the huge number of shares applied for by the assessee, the IPO Mode, only very small amount of shares were finally allotted. Some of these shares were purchased during the later half of the immediately preceding year, i.e. F.Y. 2005-06, only to be sold this year resulting in short-term capital gain/loss from the transaction. In cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the said interest cost is nothing but the purchase price of the share. The AO held that it is thus clear that the purchase price claimed for IPO shares was in fact a combination of two ingredients, one being the allotment cost of shares i.e. the pure purchase price and the other being the interest cost not at all of the shares allotted but rather of the entire lot applied for. According to the AO, section 48(2) speaks of cost of acquisition in acquiring the capital assets to be allowed in computing the capital gain from the full value of consideration. The AO stated that the interest cost must be attributable to the capital assets (i.e. which are actually such capital assets as have been and are with the assessee and not merely the expec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,84,685/- made by the AO as short-term capital gain. 5. At the time of hearing, the ld. counsel for the asessee, at the outset, submits that this issue stands covered in favour of the assessee by the decision of the Tribunal in Smt. Neera Jain vs. ACIT, Cir.12(3), Mumbai, dated 22-02- 2010 (ITA No.1861/Mum/2009) and Harshad N. Patel vs. ITO-18/17 (3)(2), Mumbai (ITA Nos.1252 1958/Mum/2010 dated 15-07-2011. He also placed on record copies of the said orders of the Tribunal. 6. On the other hand, the ld. D.R. supports the orders of the A.O. and the ld. CIT(A). 7. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the facts are not in dispute. We further fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Smt. Neera Jain (supra) and Wood Stock Broking P. Ltd. v. ACIT (ITA No.6657/Mum/2007 dated 5-1-2001), has held that the interest paid by the assessee on the money borrowed for IPO application is part of cost of acquisition and the same is to be allowed. 10. In the absence of any distinguishing feature or contrary decision brought on record by the Revenue and keeping in view that it is not the case of the Revenue that there is no nexus or the interest expenditure is personal expenses of the assessee, we, respectfully following the consistent view of the Tribunal, hold that the interest paid by the assessee on the money borrowed for IPO application is part of the cost of acquisition and the same is to be allowed as the cost of acquisit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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