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TMI Blog2020 (9) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee if the brokers to whom the brokerage amount has already been paid and the assessee even had no moral pressure. There is no justification for the disallowance on account of brokerage paid by the assessee. We direct the A.O. to delete the disallowance of brokerage - appeal of the assessee is allowed. Interest paid on money borrowed for purchase of asset - HELD THAT:- The A.P High Court in case of Addl. CIT Vs. K.S. Gupta [ 1976 (8) TMI 9 - ANDHRA PRADESH HIGH COURT] has following judgement of Delhi High Court in CIT Vs. Mithilesh Kumari [ 1973 (2) TMI 11 - DELHI HIGH COURT] held that interest paid on amount borrowed for purchase of open plot of land forms part of cost of acquisition - the assessee has correctly claimed the interest paid on borrowings for purchase of plot as cost of improvements. The action of the A.O. and Ld. CIT(A) is contrary to law and thus cannot be sustained. Thus, the addition is grossly wrong and bad in law and accordingly deleted. Capital gain computation - brokerage payment disallowance - HELD THAT:- Since, the assessee has duly filed confirmations from all the brokers to whom commission has been paid and they are also assessed to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Ld. CIT(A) against the said disallowance made by the AO. 6. By the impugned order, the ld. CIT(A) has confirmed the disallowances made by the A.O., against which the assessee is in further appeal before the ITAT. 7. We have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that the assessee during the year under assessment sold agricultural land(s) situated at village Nemeda for a total consideration of ₹ 3,74,30,500/- and has shown long term capital gains of ₹ 3,32,89,906/- after claiming the indexed cost of acquisition of ₹ 25,73,255 and indexed cost of improvement of ₹ 5,17,339/- i.e. interest paid on borrowed funds for acquisition of the capital assets sold i.e. agricultural land. During the course of assessment proceedings Assessing Officer asked the assessee to submit the details regarding funds borrowed for the purchase of agricultural land. The assessee vide letter dated 24-11-2016 has submitted that the lands were purchased several years back by borrowing funds from various parties and interest in respect to the cost of borrowed funds have been capitalized in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... run Singh Dewal 3,50,000/- Indusind bank 910480 Utsav Sharma 3,50,000/- Indusind bank 846766 The assessee during the course of assessment proceedings filed the confirmation letters of brokers to whom brokerage paid having completed addresses and IT PA Nos. All the payments were made by accounts payee cheques only. The AO in the assessment proceedings asked the assessee to produce the brokers to whom brokerage has been paid and also to submit their copy of ITR's and bank statement. The assessee vide his letter dated 20-12-2016 has submitted to the AO that the brokers have already given confirmations of the payments received by them and they are not providing copies of their ITRs to the assessee and they are also not willing to appear before your goodself on the request of assessee. The assessee further requested that in the interest of justice notice u/s 131 may be issued to them so that their attendance can be enforced. It was also submitted to AO that assessee has no legal power to compel for appearance in person before the AO. Again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the absence of details of loans in the initial year of purchase of lands the assessee is not able to correlate the loans which were taken for purchase of land. As the assessee is having records in the form of copy of land account and has not claimed the interest expense as revenue expenses in her returns of income filed. It is submitted that interest paid was clearly allowable and the AO was not justified in not allowing the benefit of cost of improvement as well as indexed cost. 15. We observe that the interest paid on money borrowed for purchase of asset is part of cost of improvement. It is submitted that assessee took loan from to purchase plot of land which was sold during the year. Thus, loan was directly relatable to purchase of property and so interest paid thereon is required to be included in cost of acquisition of said property. The A.P High Court in case of Addl. CIT Vs. K.S. Gupta (1979) 119 ITR 372 has following judgement of Delhi High Court in CIT Vs. Mithilesh Kumari (1973) 92 ITR 9 held that interest paid on amount borrowed for purchase of open plot of land forms part of cost of acquisition.The High Court of Madras in case of CIT Vs. K. Raja Gopala Rao (2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the AO. Again, vide letter dated 21-12-2016 in response to show cause notice given by the AO as to why the commission paid may not be disallowed, the assessee again requested the AO to issue notices u/s 131 of the Act as all the brokers have already furnished their confirmations. The assessee has also filed copies of bank statements highlighting entries regarding cheques through which the brokerage has been paid to brokers. The assessee again submitted that it is beyond her power(s) to compel attendance of the called person. It is further submitted that the assessee has duly filed confirmations from all persons giving their PAN and complete addresses and in the interest of justice it was the duty of the AO to assist the assessee by exercising his power u/s 131 of the Act. 17. The Hon'ble Allahabad High Court in the case of EMC (Works) Pvt. Ltd vs. ITO reported in 49 ITR 650 wherein it has been held that where application is made by the assessee requesting the AO to issue notice u/s 131 and application was rejected by the AO summarily and assessment completed, action of the AO was held to be without jurisdiction. Reliance is also placed on the decision of Hon'ble All ..... X X X X Extracts X X X X X X X X Extracts X X X X
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