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TMI Blog2023 (7) TMI 1033X X X X Extracts X X X X X X X X Extracts X X X X ..... was about double deduction u/s 48 and section 57 of the Act. Thus various High Courts have held that the interest incurred on borrowed funds are to be treated as cost of acquisition and deduction u/s 48 of the Act was allowed for the said expenditure. By respectfully following the said decisions, we hereby allow the claim of the assessee. Addition towards interest paid from escrow account by not considering the fact that the said interest does not pertain to the assessee and was towards reimbursement - assessee contended that the said amount was retained by the buyer during the slump sale and that the assessee has submitted the details of the TDS which is filed wherein, the A.O. contended that TDS was not deducted towards the said reimbursement and AR controverted the submission of the AO that details pertaining to impugned amount were not furnished before the AO - HELD THAT:- We are of the considered opinion that this issue raised by the assessee requires verification of the documentary evidence relied on by the assessee. For this purpose, we remand this issue back to the learned AO for verifying the relevant documents relied on by the assessee. Additional ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the said borrowed funds. The assessee has claimed this interest against capital gain/loss on sale of the units of mutual funds by treating it as cost of acquisition. The assessee claims this interest as an expenditure which was incurred exclusively for purchasing the mutual funds and the same amounts to the expenditure incurred for acquisition of the mutual funds which has to be added to the cost of acquisition and thereby to reduce the sale price. The assessee further contended that it had disallowed interest paid from its business expenditure and had added in the cost of acquisition. The details of the interest paid to IIFL and Kotak Bank during the impugned year are tabulated as hereunder: Particulars Amount Interest on Loan from IIFL Rs. 29,62,229/- Interest on mutual fund loan from Kotak bank Rs. 10,28,41,902/- Interest on loan from IIFL bank Rs. 2,19,73,357/- Total Rs. 12,77,77,488/- 5. This contention of the assessee was not considered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to the purchase of the units of mutual funds. The learned DR relied on the decision of the Co-ordinate Bench in the case of V. Mahesh, ITO- 14 (2)(3) Vs. Shri Vikram Sadanand Hoskote, (2007) 18 SOT 130 (Mum) and also relied on the decision of Ms. Deepti Singh Arora Vs. ACIT, 19 (1), Mumbai (2014) 49 taxmann.com 567 (Mum-Trib.). 8. We have heard the submissions made by rival sides and perused the material available on record. It is evident that the assessee has obtained loan from IIFL and Kotak bank for the purpose of purchasing units of mutual funds. The assessee is said to have claimed the interest paid on these loans for the purpose of computation of capital gain/loss. It is to be noted that the lower authorities have not disputed the fact that the assessee had availed loan for acquiring the asset by way of mutual funds. The only dispute is with regard to the subsequent interest paid by the assessee for the loans and whether the same amounts to an allowable deduction u/s 48 of the Act. It is relevant to extract the provisions of section 48 hereunder for ease of reference: 48. The income chargeable under the head Capital gains shall be computed, by deducting from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on borrowing for acquisition of capital asset is entitled for deduction u/s 48 of the Act, though in this case the primary issue was about double deduction u/s 48 and section 57 of the Act. We also placed our reliance on the decision of the Co-ordinate Bench in the case of Shri Fritz D. Silva vs. DCIT , in ITA No.236/MUM/2010 decided on 08.05.2015 which has also considered the decision of Trishul Investments Ltd. (supra). On considering the decision cited by the learned DR in the case of Natural Gas Co.Pvt. Ltd. vs. DCIT , (2015) 61 taxmann.com 297 (Mum-Trib.), we find that the said decision is distinguishable on facts wherein the assessee has claimed the interest prior to the sale as revenue expenditure and post-sale as capital cost . The facts of this case are distinguishable to the facts of the present case and does not have reliance for the issue in hand. From the above observation, we are of the considered view that various High Courts have held that the interest incurred on borrowed funds are to be treated as cost of acquisition and deduction u/s 48 of the Act was allowed for the said expenditure. By respectfully following the said decisions, we hereby allow the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose, we remand this issue back to the learned AO for verifying the relevant documents relied on by the assessee. 14. In the result, ground nos. 4, 5 and 6 are allowed for statistical purpose. 15. The assessee has raised an additional ground of appeal on the disallowance of Rs. 37,26,583/- u/s 14A r.w.r 8D of the Act. It is observed that the assessee has made investments amounting to Rs. 10,67,27,483/- during the impugned year in mutual funds for which the assessee has treated that it has invested through its own funds and has not incurred any expenses for the purpose of earning exempt income as per section 14A of the Act. The assessee has furnished working of disallowance u/s 14A of the Act at Rs. 37,26,583/- and made disallowance as per section 14A of the Act. The assessee submitted that the said disallowance may be allowed to be set off against other interest income and without prejudice, the same is to be taken as part of cost of acquisition for determining the profit/loss on sale of mutual fund. The assessee relied on the decision of the co-ordinate bench in the case of Shri Sudhir S. Mehta vs. DCIT (2021) 85 ITR (Trib.) ITAT, Mumbai. The learned DR controverted ..... 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