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The Tax Publishers Claim of additional cost of acquisition for indexation benefit due to change in area, stamp duty and interest on home loan paid *Facts:* Assessee alleged that she had to incur additional costs on acquisition of her late husband's property due to change in area, stamp duty and additional home loan interest costs. Capital gains was to be computed taking into account these cost escalations in the indexed cost. These were contested by revenue and not allowed for indexation benefit by lower tax authorities. CIT(A) went in favour of the assessee. On higher appeal by revenue - Held against the revenue/in favour of the assessee that she was entitled to the additional costs including interest paid on home loan to form part of her cost of acquisition for computing capital gains. *Ed. Note:* The ITAT has referred to the amendment made in the Finance Bill, 2023 in this decision worth noting. 7.3 Significantly, the Finance Bill, 2023 has proposed certain amendment in this regard. On a reading of the Finance Bill, it appears that as per the existing position of law, some assessee claims deduction towards interest paid on borrowed capital utilized for acquisition of the property under Section 24(b) of the Act. The same amount of interest is also being claimed under Section 48 of the Act as part of cost of acquisition. In order to prevent double deduction, the Finance Bill, 2023 has proposed to insert a proviso after clause (ii) of Section 48 so as to provide that cost of acquisition or the cost of improvement shall not include the amount of interest claimed under Section 24 of the Act. The amendment is proposed to take effect from Assessment Year 2024-25 prospectively. Thus, the proposed amendment in Section 48 to prevent double taxation makes the existing position of law loud and clear. As a corollary, as per the existing position, the assessee is entitled to claim interest on borrowed capital used for acquisition of property as part of its cost of acquisition for the purposes of determination of capital gains. For this reason also, there appears to be no infirmity in the conclusion drawn by the CIT(A). Hence, we decline to interfere. Case: ACIT v. Sadhna Aggarwal 2023 TaxPub(DT) 1844 (Delhi G Bench)

The Tax Publishers

Claim of additional cost of acquisition for indexation benefit due to change in area, stamp duty and interest on home loan paid

Facts:

Assessee alleged that she had to incur additional costs on acquisition of her late husband's property due to change in area, stamp duty and additional home loan interest costs. Capital gains was to be computed taking into account these cost escalations in the indexed cost. These were contested by revenue and not allowed for indexation benefit by lower tax authorities. CIT(A) went in favour of the assessee. On higher appeal by revenue -

Held against the revenue/in favour of the assessee that she was entitled to the additional costs including interest paid on home loan to form part of her cost of acquisition for computing capital gains.

Ed. Note: The ITAT has referred to the amendment made in the Finance Bill, 2023 in this decision worth noting.

7.3 Significantly, the Finance Bill, 2023 has proposed certain amendment in this regard. On a reading of the Finance Bill, it appears that as per the existing position of law, some assessee claims deduction towards interest paid on borrowed capital utilized for acquisition of the property under Section 24(b) of the Act. The same amount of interest is also being claimed under Section 48 of the Act as part of cost of acquisition. In order to prevent double deduction, the Finance Bill, 2023 has proposed to insert a proviso after clause (ii) of Section 48 so as to provide that cost of acquisition or the cost of improvement shall not include the amount of interest claimed under Section 24 of the Act. The amendment is proposed to take effect from Assessment Year 2024-25 prospectively. Thus, the proposed amendment in Section 48 to prevent double taxation makes the existing position of law loud and clear. As a corollary, as per the existing position, the assessee is entitled to claim interest on borrowed capital used for acquisition of property as part of its cost of acquisition for the purposes of determination of capital gains. For this reason also, there appears to be no infirmity in the conclusion drawn by the CIT(A). Hence, we decline to interfere.

Case: ACIT v. Sadhna Aggarwal 2023 TaxPub(DT) 1844 (Delhi G Bench)