Cost of acquisition of shares

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

18 January 2013 Mr. A took a loan of Rs. 100000 @ 12% interest and invested the same in shares. Whether interest is to be added to the cost of shares for the purpose of 'cost of acquisition of shares' under the head 'Capital Gains'. Please provide a case law if any.

chetan soni

chetan soni (Expert)
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18 January 2013 cost of acquisition means assets value + expenditure on capital nature to acquire that asset.

So in our case the money borrowed to acquire the asset & interest paid on such money is type of capital expenditure incurred & hence should be clubbed in the cost of acquisition.

Only if the transaction is in the nature of speculation then the same would be allowed as expenditure u/s business income chapter of income tax.