Capital gains calculation can be done after considering Interest paid on housing loan as Cost of acquisition
Subhash Bana v. ACIT
Decision: In assessee’s favour.
Capital gains–Cost of acquisition–Interest paid on housing loan allowed as deduction under section 24(b)
Facts:
Assessee earned capital gain on sale of certain property. Investment in that property was made partly out of borrowed funds. AO disallowed interest included in cost of acquisition as the same had been claimed as deduction under the head “Income from house property”. Under section 24(b).
Held:
Deduction under section 24(b) and computation of capital gains under section 48 were altogether covered by different heads of income, i.e., income from ‘house property’ and ‘capital gains. None of them excludes operation of the other. The interest in question was indeed expenditure in acquiring asset. Since both provisions were altogether different, assessee was entitled to include interest paid on housing loan for computation of capital gains under section 48, despite the fact that same had been claimed under section 24(b) while computing income from house property.
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