| COURT: | ITAT Mumbai |
| CORAM: | D. Manmohan VP, Sanjay Arora (AM) |
| SECTION(S): | 41(1), 45, 48 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | cessation, cost of acquisition, Interest, liability, remission, unclaimed liabilities |
| COUNSEL: | S. V. Joshi |
| DATE: | May 22, 2015 (Date of pronouncement) |
| DATE: | June 2, 2015 (Date of publication) |
| AY: | 2007-08 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| (i) S. 48: Interest paid on moneys borrowed to acquire assets cannot be treated as the 'cost of acquisition' of the asset, (ii) S. 41(1): Unclaimed liabilities are deemed to have been remitted/ ceased and are taxable in the year of discovery by AO | |
The interest cost is toward the retention of the borrowing and, concomitantly, the retention or the holding of the asset under reference, i.e., is a function of the holding period. It is, thus, rightly described as a holding cost or a period cost, depending upon how one may look at it. This difference is again of relevance in-as-much as the asset may be sold/realized without the repayment of the debt, so that the interest cost continues independent of the asset. Again, the debt may be repaid/liquidated, extinguishing the interest cost, while the holding of the asset continues. That is, even the holding cost relationship is not automatic or follows as a natural corollary. The two, i.e., the interest cost and cost of the asset, are in any case independent of each other
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