Interest paid on the capital borrowed shall be treated as part of cost of acquisition
In the case Addl. CIT v K.S.Gupta (1979) 119 ITR 372 (AP) similar views were taken. The Ahmedabad bench of the Tribunal also in ITO v Smt. Pushpaben B. Wadhwani (1986) 16 ITD 704 (Ahd-Trib), held that interest paid loan taken for construction of a flat would form part of cost of acquisition of flat for purposes of computation of capital gains where it has not been allowed in computation of income form house property in past.
The judicial opinion appears to be in favour of the argument that the interest paid on the capital borrowed shall be treated as part of cost of acquisition.
Source: The Tax reference, Volume 123, Issue No. 2, 9th Jan 2012.
