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| The Tax Publishers2020 TaxPub(DT) 2410 (Ahd-Trib) : (2021) 187 ITD 0591 : (2020) 084 ITR (Trib) 0343 INCOME TAX ACT, 1961
Section 55
Once assessee had been held as Investment Company, then interest expenses directly attributable to such investments was required to be capitalized. Moreover, interest paid for acquisition of shares would partake character of cost of shares and, therefore, same was rightly capitalized along with cost of acquisition of shares and, therefore, AO was not justified in denying capitalization post-acquisition of shares.
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Capital gains - Interest cost - Assessee an investment company - Capitalisation of interest cost
Assessee, a private limited company, engaged in the business of investments incurred interest cost in connection with acquisition of shares and capitalized the same by adding in the value of the investments as on last day of previous year. AO took the view that interest expenses, on money borrowed from bank which was utilized in impugned investments, post-acquisition of shares could not be capitalized. As assessee had acquired loan on 13-2-2014 which was utilized for acquiring the shares on 14-2-2014, AO allowed the assessee to capitalize the amount of interest expenses only for 2 days, i.e., 13th and 14th February. Held: Once assessee had been held as Investment Company, then interest expenses directly attributable to such investments was required to be capitalized. Moreover, interest paid for acquisition of shares would partake character of cost of shares and, therefore, same was rightly capitalized along with cost of acquisition of shares.
Relied:CIT v. Trishul Investments Ltd. (2008) 305 ITR 434 (Mad) : 2008 TaxPub(DT) 0811 (Mad-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
INCOME TAX ACT, 1961
Section 35D
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