Capital gain

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2014 Whether interest on borrowed capital to purchase property is allowable expenditure against the income from Short term capital gain

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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18 February 2014 1. Interest on borrowed capital is allowable as deduction u/s 24 while computing income from house property.

If there is no income, deduction will result in loss which can be set off against other income.

2. Deduction of interest is NOT allowed while computing capital gain. Deduction is allowed only for cost of acquisition & cost of improvement.

Interest cost is neither of the above.

Querist : Anonymous

Querist : Anonymous (Querist)

20 February 2014 but sir, we had taken unsecured loans to purchase that properties and on the sale of the said properties, we had claim interest expenditure while computing STCG.....
whether this interest cost is allowable or not?????

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CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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20 February 2014 Interest cost is NOT allowable as deduction while computing capital gain.

Section 48 prescribes the manner of computation of capital gain:
Capital gain is to be computed as under:

Sale Consideration
Less: Cost of acquisition
Less: Cost of improvement

Cost of acquisition is defined in Section 55. Interest cost is NOT included in cost of acquisition.