Smt. Amita Narang, Delhi vs The Dy Commissioner Of Income Tax, Jammu on 29 March, 2019
If, for example, the
capital asset is sold after one month or six months or a year, over which period the
borrowing continues, as it did in Mithilesh Kumari (supra), the interest cost would
vary accordingly, altering the cost of acquisition of the asset with the period for
6 ITA No. 385/Asr/2016 (AY 2007-08)
Amita Narang v. Dy. CIT
which it is held! Why, the borrowed capital may be repaid immediately, while the
acquisition, since complete, and thus its' cost, would remain unaltered. Again, the
borrowed capital may not be repaid even after the asset is sold, and interest may
continue to be incurred, deploying the sale proceeds for any other purpose. In a
given case, the asset may be sold on credit, so that interest cost continues to be
incurred. The same, in short, it needs to be appreciated, is a holding cost, i.e., cost
of holding the asset, post acquisition, allowable as a revenue expenditure where the
asset is to be used for the purpose of business.