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TMI Blog2020 (10) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... TMI 1912 - ITAT AHMEDABAD] to this assessment year. The assessee has demonstrated that the borrowed funds have been used by him in making investments. Therefore, he is entitled for the claim of interest expenditure while computing the Long Term Capital Gains/Short Term Capital Gains on sale of investments - Appeal of the assessee is partly allowed. - ITA No. 902/Ahd/2018 - - - Dated:- 19-3-2020 - Shri Rajpal Yadav, Vice President And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri P.F. Jain, AR For the Revenue : Shri Dileep Kumar, Sr DR ORDER PER RAJPAL YADAV, VICE PRESIDENT :- The assessee is in appeal before the Tribunal against the order of the learned CIT(A)-3, Ahmedabad dated 12th February 2018 passed for Assessment Year 2013-14. 2. In the first ground of appeal the assessee has pleaded that the learned CIT(A) has erred in upholding the addition of ₹ 54,366/- which was added by the Assessing Officer with the aid of Section 14A of the Income-tax Act. The learned Counsel for the assessee, at the time of hearing, did not press this ground of appeal; hence, it is rejected. 3. Ground Nos. 3 4 are general grounds of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed this interest expenditure against any of his other income. It was also claimed that the amount has been used for acquisition of land which is subject matter of capital gain. The AO on the other hand gave detailed findings at page no.4-7 of assessment order. It is stated that unsecured loans are bifurcated among the land investment and partnership firms at the end of the year. The AO has mentioned that no nexus has been proved for the loan arrival and investment in the properties. The AO has noted that for instance for Gota land no loan has been utilized and for Shohli land no information was submitted. Further it has been noted that the benefit of indexation of cost has been taken for Gota land. It is seen that similar addition was made in AY 2010-11 and the same has been confirmed by CIT(A). the appellant has not distinguished his case from the facts of assessment year 2010-11. The capital gains do have concessional taxation rate in addition to the benefit of indexation to partly offset tax liability. The appellant cannot be allowed to get best of both the worlds at the cost of revenue. The interest expenditure can only be allowed if any only if, (i) Perfect nexus of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Calcutta High Court in the case of CIT vs. Fort Gloster Industries (P.) Ltd. (1971) 79 ITR 48(Cal.) in which it was held that the interest paid on the borrowings had to be taken as part of the actual cost of plant and machinery. In holding so, the Hon'ble High Court of Calcutta had followed the judgment of Hon'ble High Court of Bombay in the case of Habib Hussein vs. CIT (1963) (48 ITR 859) in which it was held as under :- The dictionary meaning of the word 'cost' is 'what is laid out or suffered to obtain anything'..... In our opinion, therefore, the meaning of the expression 'actual cost to the assessee' as used in sub-section(5) of section 10 of the Act would be what the assessee has, in fact, expended or laid out for the purpose of acquiring the depreciable assets. 5.1 It is clear from the judgment of the Hon'ble Jurisdictional High Court in the case of Habib Husein (supra), that actual cost is nothing but the expenditure incurred for acquiring the asset, and therefore, the argument of the ld. DR that cost of acquisition was different from actual cost cannot be accepted. The cost of acquisition as to what the assessee incurred for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in all these decisions, Hon'ble High Court and Tribunal concurred with the proposition that if a capital asset is being purchased by way of borrowed funds, the interest expenditure are to be capitalized and on transfer of the capital assets, it is to be treated as part of cost of acquisition. A perusal of the order of the ld.CIT(A) would indicate that the ld.CIT(A) also did not dispute with regard to this proposition and has not rejected the claim of the assessee on legal aspect rather confirmed the disallowance on the ground that the assessee failed to establish nexus between borrowed funds vis- - vis investment. This second fold of issue involved in this appeal, which we take for adjudication. The ld.CIT(A) has made discussion on facts under three sub-heads; (a), (b) and (c) in para 5.1. According to the ld.CIT(A) a perusal of the bank statements and balance sheet would reveal that a sum of ₹ 5.00 lakhs was borrowed from Shri Mukesh Kumar T. Padhiyar on 4.10.2006; ₹ 2.00 lakhs was borrowed from Shri Mahesh T. Padiyar HUF. He thereafter made reference to the balance sheet as on 31.3.2008 and observed that no loans are reflected from Shri Mukesh Kumar T. Padhiyar an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO, which is absolutely silent on any of the aspects though the ld.CIT(A) has made reference to the details in order to demonstrate that the assessee failed to prove the nexus, but on re-appreciation of these very details we are of the view that the ld.CIT(A) has not appreciated the facts in right perspective, and considered them half-heartedly. Therefore, we allow the appeal of the assessee and delete the disallowance. 9. In Assessment Year 2010-11, the Assessing Officer has reproduced the summary of fund flow of the assessee from FYs 2005-06 to 2009-10. The Tribunal has taken cognizance of fund flow statement in its order. The same fund flow statement has been noticed by the Assessing Officer from FYs 2005-06 to 2009-10 on page no. 4 of the present assessment order for AY 2013-14. Before learned CIT(A) the assessee has produced summary of fund flow of the assessee from FYs 2005-06 to 2012-13. We have perused the same and, after analysis, we find that there is no disparity on facts between AYs 2010-11 to this assessment year. The assessee has demonstrated that the borrowed funds have been used by him in making investments. Therefore, he is entitled for the claim of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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