SANJAY BANSAL,UTTAR PRADESH vs. ACIT CIRCLE-2(2)(1),GHAZIABAD, UTTAR PRADESH

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ITA 1619/DEL/2025Status: DisposedITAT Delhi30 December 2025AY 2016-17Bench: SHRI ANUBHAV SHARMA (Judicial Member), SHRI. KRINWANT SAHAY (Accountant Member)4 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s finding that interest paid on a housing loan for property purchase is a financial liability, not part of the cost of acquisition for capital gains, but rather revenue expenditure allowable under the head 'income from house property'. The Tribunal also agreed with the CIT(A)'s decision to remand the issue of the Rs.1,40,877/- disallowance back to the AO for verification, concluding that this was not against the law. Consequently, the assessee's appeal on all grounds was dismissed.

What were the facts?

The assessee filed an ITR for AY 2016-17, claiming a large short-term capital loss of Rs.18,17,220/- from the sale of a flat. The Assessing Officer disallowed Rs.13,00,425/- claimed as interest on a housing loan, holding it inadmissible under Section 48 for computing capital gains, and further disallowed Rs.1,40,877/- claimed as cost of acquisition for lack of supporting evidence. The Ld. CIT(A) upheld the disallowance of interest, stating it could not be part of the cost of acquisition, and directed verification for the Rs.1,40,877/- claim while disallowing the carry forward of associated losses.

What were the issues?

1. Whether interest paid on a housing loan for property acquisition can be included as part of the cost of acquisition for computing capital gains under Section 48. 2. Whether certain expenditure of Rs. 1,40,877/- claimed as cost of acquisition was admissible and if the resultant short-term capital loss could be carried forward.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1),Section 48,Section 271(1)(c),Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

This is an appeal filed by the Assessee against the order of the Ld. CIT, Appeal, ADDL/JCIT(A) Aurangabad dt. 25/02/2025 pertaining to Assessment Year 2016-17.

2.

In the present appeal Assessee has raised the following grounds:

1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in not considering a sum of Rs. 13,00,425/- on account of interest on loan paid to India Bulls for purchase of property as deduction from cost of acquisition and that too by recording incorrect facts and finding and without observing the principles of natural justice.

2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in not considering a sum of Rs. 13,00,425/- on account of interest on loan paid to India Bulls for purchase of property as deduction from cost of acquisition is bad in law and against the facts and circumstances of the case.

3.

That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the disallowance of Rs. 1,40,877/- and further erred in directing the assessing office in this regard.

4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal

at the time of hearing and all the above grounds are without prejudice to each other.

3. Briefly the facts of the case are that the assessee filed his return of income for AY 2016-17 on 17.10.2016 declaring total income of Rs.55,07,170/- after claiming deductions under Chapter VI-A. The case was selected for limited scrutiny under CASS to examine (i) large short-term capital loss on sale of property and (ii) mismatch in sale consideration as per ITR and Form 26QB.

3.1 The assessee had purchased a flat at Indirapuram, Ghaziabad on 05.10.2012 and sold the same on 15.04.2015 for Rs.65,00,000/-, claiming short- term capital loss of Rs.18,17,220/-. Notices under sections 143(2) and 142(1) were issued and, pursuant to a show-cause notice, the assessee furnished the requisite details.

3.2 The AO disallowed interest of Rs.13,00,425/- claimed on housing loan holding it to be inadmissible under section 48, and further disallowed Rs.1,40,877/- claimed as cost of acquisition for want of supporting evidence. Consequently, the assessed income was determined at Rs.69,48,472/-. Penalty proceedings under section 271(1)(c) were initiated and interest under sections 234B, 234C and 234D was charged as per law.

4.

Aggrieved by the asses sment order, the assessee preferred an appeal before the Ld. CIT(A).

4.1 Regarding the disallowance of interest of Rs. 13,00,425/-, the Ld. CIT(A) upheld the findings of the AO, ruling that the interest paid on a property loan is not allowable under Section 48 for the purpose of computing capital gains. The Ld. CIT(A) further directed that the assessee is not entitled to carry forward the resultant short-term capital loss to future years.

4.2 In respect of the addition of Rs. 1,40,877/-, the assessee submitted before the Ld. CIT(A) that a revised computation of income had been filed wherein this specific expenditure was no longer claimed. Taking note of this submission, the 4.3 Ld. CIT(A) directed the AO to verify the revised computation. It was ordered that if the expenditure was indeed not claimed in the revised ITR, the addition should be deleted. However, the Ld. CIT(A) maintained that no carry- forward of associated losses would be permitted.

4.4 In conclusion, the Ld. CIT(A), vide order dated 25.02.2025, partly allowed the appeal for statistical purposes, sustaining the primary addition related to interest while providing a window for verification regarding the unsubstantiated expenditure.

5.

Against the order of the Ld. CIT(A) the assessee preferred in appeal before the Tribunal.

6.

During the course of hearing none appeared on behalf of the assessee. Therefore we decide this appeal after hearing the submissions of the Ld. DR and carefully perusing the material available on record.

7.

Per contra, the Ld. DR relied on the order of the lower authorities.

8.

We have heard the contention and perused the material available on the record. Vide ground no. 1 & 2 the Ld. CIT(A) in his appellate order has given a very clear and categorical finding that the interest paid on housing loan in respect of purchase of property is a financial liability of the assessee and not part of cost of acquisition, therefore the interest paid towards housing loan is allowable under the head income from house property as revenue expenditure and therefore it cannot be include as part of capital expenditure for computing cost of acquisition. We are of the considered view that finding given by the Ld. CIT(A) on this issue is very clear and needs no interference. Therefore these grounds of appeal are dismissed.

8.1 Regarding ground no. 3 the Ld. CIT(A) in the appellate order has given a very clear finding in para 7.5 which read as under:

7.5. Further, the AO has correctly disallowed the said short term capital loss, hence, the appellant is not allowed to carry forward the said losses for the future year. Accordingly, this ground of appeal is dismissed. The ground no. 5 is related to addition of Rs.1,40,877/- which was claimed as forming the part cost of acquisition. From the computation it is seen that the appellant has paid said amount for the delayed possession. In this regard the appellant has stated that he has submitted revised computation of income and in the said computation of income no such expenses has been claimed. In this regard the AO is directed to verify the said expenses claimed or not, if the said expenses have not been claimed there is no question of disallowance of the same by making addition in total income. However, the appellant is not allowed to carry forward the said losses for the future year. Accordingly, this ground of appeal is allowed for statistical purpose. By considering the above finding given by the Ld.CIT(A) on the present issue we find that he has simply remand back this issue to the file of the AO for verification which is not against the law therefore assessee’s appeal on this issue is also dismissed.

9.

In the result appeal of the Assessee is dismissed.

Order pronounced in the open Court on 30.12.2025

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