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TMI Blog2024 (8) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... y not be in a position to establish that the land was acquired for business purposes. As further be seen that one-time settlement was arrived at and the land was possessed and sold by the bank. The entire sale proceeds have been retained by the bank and nothing has come to the assessee. In such a case, the decision of case of Sri Hariram Hotels P Ltd. [ 2009 (12) TMI 369 - KARNATAKA HIGH COURT ] would apply which has, more or less, similar facts. In this case, the assessee purchased an immoveable property for a project which did not materialize on account of various reasons and ultimately assessee-company sold the said property. While computing amount of capital gains, assessee claimed deduction in respect of interest paid to Directors on l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2006-07 arises out of the order of learned Commissioner of Income Tax (Appeals)-18, Chennai [CIT(A)] dated 13-04-2023 in the matter of an assessment framed by Ld. AO u/s 153A r.w.s. 143(3) of the Act on 31- 12-2009. The deceased assessee is represented by her legal heir. The sole grievance of the assessee is confirmation of certain addition of Long-Term Capital Gains (LTCG) 2. This is second round of appeal. The Ld. AR has placed on record sequence of events. It emerges that the assessee was searched u/s 132 on 16-05-2007. The Ld. AO framed an assessment u/s 153A r.w.s. 143(3) on 31-12-2009. During search, a sworn statement was recorded from assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was her capital asset. The claim that the loan taken by the company in which the assessee was director and interest paid on such loan should be allowed as cost of acquisition, could not be accepted. The loan was not taken for the acquisition of the property. There was no nexus between the loan and capital asset. Accordingly, the claim was denied. 5. The assessee sought rectification of the order u/s 154 which were disposed-off vide order dated 14-06-2023. The assessee submitted that comprehensive written submissions as well as additional grounds were not considered. These grounds include the alternative ground that the development and sale of plot was assessee s business venture and therefore, interest component of one-time settlement w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Hon ble DRT in favor of the bank. The said settlement includes interest component of Rs. 259.44 Lacs. Pursuant to recovery action, substantial land to the extent of 64.63 grounds was possessed by the bank which was sold by them and appropriated towards loan and interest dues. The entire consideration was retained by the bank and nothing came to assessee. The assessee sold 5.29 grounds only the sale proceeds of which reached the assessee. It was the submission of the assessee that loan was borrowed to acquire the property and the entire sale proceeds were utilized to repay interest and nothing came to the assessee and therefore, there would not be any capital gains in the hands of the assessee. The assessee also submitted that in such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowed from them in order to purchase property in question. The same was denied by lower authorities. However, Tribunal allowed assessee s claim on the ground that since the property had been purchased out of loans borrowed from Directors, any interest paid thereon was to be included while calculating cost of acquisition of asset. The Hon ble Court upheld the order of Tribunal. Similar is the decision of Hon ble High Court of Delhi in CIT vs. Mithlesh Kumari (supra).In this case, the assessee purchased perpetual leasehold rights in a plot of land and raised a loan for paying price of land. The assessee paid interest on such borrowings. The assessee sold the land and offered gains after including amount of interest and ground rent in actual c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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