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TMI Blog2019 (6) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... n has been carried out except of the shares on which short term capital gain has been earned. It is the submission of assessee that in assessment year 2013-14 assessee has also paid interest to Moti Lal Oswal Financial Services amounting to 4,90,555/- which was accepted by the department and allowed as deduction from short term capital gain. From the various details furnished by the assessee it requires a re-visit to the file of the Assessing Officer to adjudicate the issue afresh in the light of the various submissions made by the assessee before me. Needless to say the AO shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. X X X X Extracts X X X X X X X X Extracts X X X X ..... h intraday trading; derivative trading and trading in shares for investment purposes is performed. • As per the assesee's submission, interest is charged on day-to-day basis and debited at the end of the month. Assessee has proportionately divided the monthly interest expenses with the cost of each share (sold in short term). But for the computation of capital gain each security/shares is to be treated as separate capital asset and thereby requiring specific computation of cost of borrowed capital for its purchase. The method adopted by assessee has resulted in disproportionate charging of interest as part of cost of acquisition for every share because proportionate interest cost of those shares purchased with borrowed funds thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness activity together. 4.7 Therefore based on the discussion supra, the interest expense of ₹ 10,76,258/- cannot be said to beincurred only on the shares kept for investment purposes as the funds available with the Motilal Oswal are mixed funds. These interest expenses actually pertain to the period after date of acquisition of such investments overdrawing as well as corresponding interest starts only from the moment shares are purchased. Further looking at the turnover of the assessee for F&O and share business it cannot be accepted that the loan has been used for investment in shares (short term investment). The assessee must calculate the interest expenses against each security held for investment purpose if cost of acquisiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court of Delhi in the case of CIT v Mithlesh Kumari [1973] 92 ITR 9 (Delhi). 5. However, the Ld. CIT(A) was not satisfied with the arguments advanced by the assesee and upheld the action of the Assessing Officer. While doing so he held that no interest was paid by the assessee for the period prior to purchase of shares. He observed that the issue whether interest paid on the borrowed money for acquisition of the shares could be added to its cost of acquisition for computation of capital gains is squarely covered against the assessee by the judgment of Hon'ble Calcutta High Court in the case of CIT v L N Dalmia and the judgment of Karnataka High Court in the case of CIT v Maithreyei Pai (supra). Further ITAT Mumbai in its various dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction has been carried out except of Short Term Capital Gain and the interest paid has been apportioned against each investment. Referring to paper book page No. 6 and 7 which contains the Statement of Capital Gain he submitted that the same shows share wise interest allocated. The statement also shows transactions through ICICI Bank and J M Financial Services on which no interest has been claimed. The interest paid was capitalized as cost of acquisition of investment. The interest was paid on funds raised for purchase of shares. It is but natural that the interest will be paid only from the date from which the investments are purchased and loan is raised. The interest is payable up to the date when the repayment is made. The interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment in shares. It is also his allegation that the exact amount of interest expenses pertaining to capital borrowed for the purchase of such shares and for the period prior to purchase of such shares (which is includible as part of cost of acquisition) has not been computed by the assessee. I find the Ld. CIT(A) upheld the action of the Assessing Officer on the ground that no interest was paid by the assessee for the period prior to purchase of shares. It is the submission of the Ld. Counsel for the assessee that the interest expenditure of ₹ 10,76,258/- was incurred on borrowings made for acquisition of investments made in shares and there are no mixed funds and that it is a separate account in which no other transaction has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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