Mrs. Rekha Bansal, Delhi V. ITO, New Delhi

CO 43/DEL/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1204 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 03-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Onus to prove
• Section: 143(3); 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `F NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.4455/DEL/2013 ASSESSMENT YEAR : 2009-10 INCOME TAX OFFICER, VS REKHA BANSAL, WARD 25(1), A-7, PUSHPANJALI ENCLAV E, ROOM NO. 1707, PITAMPURA, DELHI. 17 TH FLOOR, E-2 BLOCK, (PAN: AEFPB0239M) CIVIC CENTRE, MINTO ROAD,J.L.N. MARG, NEW DELHI. C.O. NO. 43/DEL/2014 (IN I.T.A.NO.4455/DEL/2013) ASSESSMENT YEAR : 2009-10 REKHA BANSAL, VS ITO, WARD 25(1), NEW D ELHI. DELHI. (APPELLANT) (RESPONDENT) APPELLANT B Y: SHRI VIKRAM SAHAY, SR. DR RESPONDENT BY : SHRI R.R. SINGLA, CA O R D E R PER CHANDRAMOHAN GARG, J.M. THE APPEAL OF THE REVENUE AS WELL AS C.O. OF THE AS SESSEE HAVE BEEN FILED AGAINST THE ORDER OF CIT(A)-XXIV, NEW DELHI DATED 3 0.05.2013 IN APPEAL NO. 347/11-12 /120 FOR AY 2009-10. ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 2 REVENUES APPEAL IN ITA NO. 4455/DEL/2013 FOR AY 2 009-10 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW CIT(A) HAS ERRED IN- 1. DELETING THE ADDITION OF RS. 28,75,000/- MADE BY AO U/S 68 OF THE INCOME TAX ACT, 1961 AS THE ASSESSEE FAILED TO PROV E THE GENUINENESS OF THE UNSECURED LOAN. 2. DELETING THE ADDITION WHEN NO CONFIRMATION HAS BEEN FILED EITHER BEFORE THE AO AND THE CIT(A) . 3. DELETING THE ADDITION ON THE BASIS MERELY THAT P AYMENT HAS BEEN MADE THROUGH BANKING CHANNEL WHEN NO OTHER EVIDENCE HAS BEEN FILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. 3. LD. DR ALSO PRESSED APPLICATION DATED 5.3.20 15 FOR ADMISSION OF ADDITIONAL GROUND WHICH READS AS UNDER:- 1. ALLOWING THE INTEREST OF RS.12,82,571/- PAID O N LOAN TAKEN FROM THE BANK TO BE CAPITALIZED AND REDUCED F ROM THE SALE CONSIDERATION OF THE PROPERTY WHILE COMPUTING THE C APITAL GAIN BY THE AO. 4. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES ON A DMISSIBILITY OF ADDITIONAL GROUND OF THE REVENUE. LD. DR SUBMITTED THAT THE A O MADE DISALLOWANCE OF INTEREST OF RS.12,82,571/- PAID ON LOAN TAKEN FROM THE BANK WHICH WAS DELETED BY THE CIT(A) WITH THE CONCLUSION THAT THE INTEREST PAID BY THE ASSESSEE ON LOAN TAKEN FROM THE BANK IS TO BE CAPITALIZED AND RATES FROM THE SALE CONSIDERATION OF THE PROPERTY WHILE COMPUTING THE CAPITAL GAINS. LD . DR SUBMITTED THAT AGAINST THE RELIEF GRANTED BY THE CIT(A) TO THE ASSESSEE ON THIS ISSUE, GROUND COULD NOT BE RAISED WHILE FILING THE ORIGINAL APPEAL, THEREFO RE, THE SAME MAY KINDLY ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 3 ADMITTED AS ADDITIONAL GROUND OF THE REVENUE BEING MIXED WITH THE GROUND OF FACT AND LAW. LD. AR OBJECTED TO THE ADMISSIBILITY OF ADDITIONAL GROUND AND SUBMITTED THAT THE CIT(A) WAS RIGHT IN GRANTING REL IEF AND WHEN THE REVENUE HAS NOT RAISED THIS GROUND AT THE TIME OF FILING ORIGIN AL APPEAL, THEN THE SAME CAN NOT BE SUBMITTED AS ADDITIONAL GROUND AT LATE STAGE OF HEARING. 5. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, W E ARE OF THE CONSIDERED VIEW THAT THAT THE ADDITIONAL GROUND PROPOSED TO BE ADMITTED BY THE REVENUE DESERVES TO BE ADMITTED BEING GROUND ARISING FROM T HE RELIEF GRANTED BY THE CIT(A) TO THE ASSESSEE AND WE ADMIT THE SAME. GROUND NO. 1, 2 & 3 OF THE REVENUE 6. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES APROPO S THIS GROUND OF THE REVENUE AND ALSO PERUSED THE RELEVANT MATERIAL PLAC ED ON RECORD BEFORE US. LD. DR SUBMITTED THAT THE CIT(A) HAS ERRED IN LAW AND O N FACTS IN DELETING THE ADDITION OF RS.28,75,000 MADE BY THE AO U/S 68 OF T HE INCOME TAX ACT 1961 AS THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF UNS ECURED LOAN. LD. DR FURTHER CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED IN DELE TING THE SAID ADDITION WHEN NO CONFIRMATION HAS BEEN FILED EITHER BEFORE THE AO OR BEFORE THE CIT(A) AND THE ADDITION WAS DELETED MERELY ON THE BASIS THAT P AYMENT HAS BEEN MADE THROUGH BANKING CHANNEL, SPECIALLY WHEN NO EVIDENCE HAS BEEN FILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION. LD. COUNSEL LA STLY SUBMITTED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT O F THE AO ON THIS ISSUE. ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 4 7. LD. AR STRONGLY SUPPORTED THE IMPUGNED ORDER AND SUBMITTED THAT THE AO MADE ADDITION U/S 68 OF THE ACT WITHOUT ANY BASIS. LD. AR FURTHER SUBMITTED THAT AS PER DETAILS FILED BY THE ASSESSEE ON 17.10. 2011, THE ASSESSEE VERY WELL ESTABLISHED THAT SHE HAS TAKEN A LOAN OF RS. 15,75, 000 FROM ONE SHRI MANOJ KUMAR AND OF RS.13 LACS FROM ONE SHRI UTTAM SINGH I N ADDITION TO OTHER UNSECURED LOANS ALONG WITH DETAILS/CONFIRMATION. L D. DR FURTHER SUBMITTED THAT THE ASSESSEE VIDE HER LETTER DATED 31.10.2011 REQUE STED THE AO TO SUMMON THESE CREDITORS AND INFORM THEIR ADDRESS BUT INSTEAD OF M AKING ANY FURTHER VERIFICATION OR EXAMINATION OR CALLING THE RESPECTIVE CREDITORS, THE AO PROCEEDED TO MAKE ADDITION WITHOUT ANY BASIS AND WRONGLY HELD THAT TH ESE LOANS ARE NOT GENUINE. LD. AR FURTHER SUBMITTED THAT THE CIT(A) RIGHTLY CO NSIDERED CONFIRMATION AND OTHER RELEVANT EVIDENCE SUBMITTED BY THE ASSESSEE A ND RIGHTLY HELD THAT BOTH SHRI MANOJ KUMAR AND SHRI UTTAM SINGH HAD SUFFICIENT BAN K BALANCE BEFORE ISSUING CHEQUES TO THE ASSESSEE, THEREFORE, IMPUGNED ADDITI ON WAS DELETED BY THE FIRST APPELLATE AUTHORITY. LD. DR ALSO PLACED REJOINDER TO THE ABOVE SUBMISSIONS BY THE ASSESSEE AND SUBMITTED THAT THE ASSESSEE HAS DE LIBERATELY CONCEALED PARTICULARS OF HER INCOME AND DESPITE SUMMONS ISSUE D TO THESE CREDITORS NOBODY ATTENDED NOR THE REQUIRED DETAILS/CONFIRMATIONS, BA NK ACCOUNT AND ITRS WERE FILED, THEREFORE, THE ASSESSEE DID NOT DISCHARGE HE R ONUS TO PROVE GENUINENESS AND CREDITWORTHINESS OF THESE CREDITORS THEREFORE, ADDITION MADE BY THE AO U/S 68 OF THE ACT IS SUSTAINABLE AND IN ACCORDANCE WITH LAW. ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 5 8. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS FR OM BARE READING OF THE IMPUGNED ORDER OF THE CIT(A), WE NOTE THAT THE CIT( A) GRANTED RELIEF FOR THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSION :- 4.2 IN GROUND NO. 2, THE APPELLANT HAS IMPUGNED TH E ADDITION OF RS.28,75,000/- AS HER INCOME FROM AS H ER INCOME FROM UNDISCLOSED SOURCES U/S. 68 OF THE ACT. SHE SU BMITTED THAT TEMPORARY LOANS HAD BEEN TAKEN BY HER FROM SH. MANO J KUMAR AND SH. UTTAM SINGH AND SINCE, SHE WAS NOT ON GOOD TERMS WITH THEM AS ON TODAY, SHE REQUESTED THAT THESE PERSONS MAY BE SUMMONED U/S. 131 OF THE ACT. ACCORDINGLY, SUMMONS WERE ISSUED TO BOTH SH. MANOJ KUMAR AND HIS FATHER SH. U TTAM SINGH. THE APPELLANT ALSO INFORMED THAT THE PRESENT ADDRES S OF BOTH SH. MANOJ KUMAR AND SH. UTTAM SINGH WAS F -191, PRASHAN T VIHAR, DELHI - 110 085. SUMMONS WERE AGAIN ISSUED TO BOTH OF THEM AT THIS NEW ADDRESS. SUMMONS SENT BY SPEED POST WERE S ERVED ON THEM AND ACKNOWLEDGEMENTS WERE PLACED ON RECORD. HO WEVER, NEITHER OF THEM ATTENDED THE PROCEEDINGS. ACCORDING LY, AFTER SERVING THEM WITH A SHOW-CAUSE NOTICE, PENALTY WAS IMPOSED ON THEM U/S. 272A(L)(C) OF THE ACT. SIMULTANEOUSLY, NO TICES U/S. 133(6) WERE ISSUED TO KARUR VYSYA BANK, PRASHANT VI HAR, SECTOR-14, ROHINI, DELHI - 110 085 TO SUPPLY AUTHEN TICATED COPIES OF FRONT AND BACK SIDE OF CHEQUES NO. 648361 AND 64 8362 ISSUED BY THE APPELLANT MRS. REKHA BANSAL FROM HER ACCOUNT NO. 4104155000012813 TO SH. MANOJ KUMAR AND SH. UTTAM S INGH FOR RS.15,75,000/- AND RS.13 LACS RESPECTIVELY. TH ESE COPIES, DULY AUTHENTICATED BY THE BANK WERE PROVIDED BY KAR UR VYSYA BANK AND HAVE BEEN PLACED ON RECORD. THESE CHEQUES WERE DEPOSITED IN THE BANK ACCOUNTS OF SH. MANOJ KUMAR A ND SH. UTTAM SINGH IN HDFC BANK, A-24, PUSHPANJALI ENCLAVE , RING ROAD, PITAMPURA, NEW DELHI - 110034. NOTICE U/S. 13 3(6) WAS ISSUED TO HDFC BANK FOR GIVING COPY OF THE BANK ACC OUNT OF BOTH SH. MANOJ KUMAR AND SH. UTTAM SINGH BEING A/C NUMBE R 07111000008105 AND 02851570001060 RESPECTIVELY. THE SE COPIES WERE RECEIVED AND IT WAS NOTICED THEREFROM T HAT BOTH SH. MANOJ KUMAR AND SH. UTTAM SINGH HAD SUFFICIENT BANK BALANCE IN THEIR ACCOUNTS BEFORE ISSUING CHEQUES TO THE APP ELLANT SMT. REKHA BANSAL. IN THE LIGHT OF THE ABOVE EVIDENCE, T HE ADDITION OF RS.28,75,000/- TO THE INCOME OF THE APPELLANT BECOM ES UNTENABLE AND THE SAME IS HEREBY DELETED. ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 6 9. AS PER SUBMISSIONS OF BOTH THE SIDES, IT IS AMPL Y CLEAR THAT THE AO MADE IMPUGNED ADDITION IN ABSENCE OF DETAILS, CONFIRMATI ON, BANK ACCOUNTS AND ITR COPIES OF THE ALLEGED CREDITORS SHRI MANOJ KUMAR AN D SHRI UTTAM SINGH. DURING FIRST APPELLATE PROCEEDINGS, THE CIT(A) GRAN TED RELIEF TO THE ASSESSEE ON THE BASIS OF INFORMATION RECEIVED FROM THE RESPECTI VE BANKS OF THE CREDITORS IN COMPLIANCE TO THE NOTICE ISSUED TO THESE BANKS U/S 133(6) OF THE ACT WHEREIN THE FIRST APPELLATE AUTHORITY FOUND THAT THE ALLEGED CR EDITORS HAD SUFFICIENT BANK BALANCE IN THEIR ACCOUNTS BEFORE ISSUING CHEQUES TO THE ASSESSEE. IT IS ALSO PERTINENT TO NOTE THAT PRIOR TO CALLING BANK STATEM ENT COPIES BY WAY OF NOTICE U/S 133(6) OF THE ACT, THE CIT(A) ALSO ISSUED SUMMONS T O THE RESPECTIVE CREDITORS WHICH WERE NOT COMPLIED AND THE CIT(A) ALSO SERVED A SHOW CAUSE NOTICE PROPOSING TO IMPOSE PENALTY U/S 272A(1)(C) OF THE A CT. IN THIS SITUATION, THE CIT(A) WAS RIGHT IN HOLDING THAT THE ASSESSEE DISCH ARGED HER ONUS BY WAY OF FILING REQUIRED DETAILS, CONFIRMATION AND OTHER REL EVANT DOCUMENTARY EVIDENCE AND ALSO BY FILING PAN NUMBER AND ADDRESSES OF THE RESPECTIVE CREDITORS. HOWEVER, THE ALLEGED CREDITORS DID NOT COMPLY WITH THE NOTICE U/S 131 OF THE ACT AND DID NOT APPEAR EITHER BEFORE THE AO OR BEFORE T HE CIT(A) BUT THE FIRST APPELLATE AUTHORITY ADOPTED COURSE OF VERIFYING THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE RESPECTIVE CREDITORS FROM THEIR RESPECTIVE BANKS BY ISSUING NOTICE U/S 133(6) OF THE ACT. ON THE BASIS OF INFORMATION RECEIVED THEREFROM THE CIT(A) HAS DRAWN A LOGICAL C ONCLUSION THAT SHRI MANOJ KUMAR AND SHRI UTTAM SINGH HAD SUFFICIENT BANK BALA NCE IN THEIR ACCOUNTS ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 7 BEFORE ISSUING CHEQUES TO THE ASSESSEE WHICH SHOWS GENUINENESS OF THE TRANSACTION AS WELL AS CREDITWORTHINESS OF THE ALLE GED CREDITORS. IN THIS SITUATION, THE ADDITION MADE BY THE AO U/S 68 OF THE ACT COULD NOT BE HELD AS SUSTAINABLE AND THE SAME WAS RIGHTLY DELETED BY THE CIT(A). AC CORDINGLY, GROUND NO. 1, 2 AND 3 OF THE REVENUE BEING DEVOID OF MERITS ARE DIS MISSED. ADDITIONAL GROUND OF THE REVENUE 10. APROPOS ADDITIONAL GROUND OF REVENUE, LD. DR SU BMITTED THAT THE CIT(A) HAS GROSSLY ERRED IN ALLOWING THE INTEREST OF RS.12 ,82,571 PAID ON THE LOAN TAKEN FROM THE BANK TO BE CAPITALIZED AND REDUCED FROM TH E SALE CONSIDERATION OF THE PROPERTY WHILE COMPUTING THE CAPITAL GAIN. LD. DR VEHEMENTLY POINTED OUT THAT PROPERTY NO. 163, DEEPALI, PITAMPURA, DELHI WAS PU RCHASED AT RS.63,68,450 AND THE ASSESSEE PAID INTEREST TO THE BANK AMOUNTING TO RS.12,82,571 AND THE AMOUNT OF INTEREST WAS CAPITALIZED AND DEDUCTED FROM SALE CONSIDERATION FOR CALCULATION OF CAPITAL GAIN WHICH IS NOT A PROPER APPROACH. L D. DR FURTHER SUBMITTED THAT THE ASSESSEE TOOK LOAN OF RS. 85 LAKH AGAINST WHICH THE IMPUGNED INTEREST WAS PAID, THEREFORE, CAPITALIZATION OF THIS AMOUNT WAS NOT PERMISSIBLE IN ACCORDANCE WITH PROVISIONS OF THE ACT. LD. DR COMPLETED HIS ARGUMENT ON THIS ISSUE BY SUBMITTING THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 11. LD. AR STRONGLY SUPPORTED THE IMPUGNED ORDER AN D SUBMITTED THAT WHEN THE ASSESSEE PAID INTEREST ON THE LOAN TAKEN FOR PU RCHASE OF PROPERTY, THEN THE ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 8 AMOUNT OF INTEREST SHOULD BE CAPITALIZED FOR CALCUL ATION OF CAPITAL GAINS ACCRUED TO THE ASSESSEE ON SALE OF SUCH PROPERTY. LD. AR F URTHER POINTED OUT THAT THE AO WAS NOT JUSTIFIED IN DENYING THE BENEFIT OF INTERES T TO THE ASSESSEE WHICH WAS PAID FROM THE BANK ACCOUNT OF THE ASSESSEE IN KARUR VYSYA BANK. LD. AR SUBMITTED THAT THE CIT(A) WAS RIGHT IN DIRECTING TH E AO TO DELETE THE ADDITION TO THE INCOME OF THE ASSESSEE UNDER THE HEAD CAPITAL GAINS. 12. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, AT THE VERY OUTSET, THE AO DENIED THE CAPITALIZATION OF THE INTEREST BY HOLDIN G THAT THE INTEREST CLAIMED BY THE ASSESSEE IS NOT AN ALLOWABLE EXPENDITURE AS THE PROPERTIES IN THE NAMES OF THE ASSESSEES HUSBAND AND THE LOAN HAS BEEN TAKEN IN T HE NAME OF ASSESSEES HUSBAND SHRI AJAY KUMAR BANSAL. THE CIT(A) GRANTED RELIEF TO THE ASSESSEE BY OBSERVING THAT THE EVIDENCE GATHERED U/S 133(6) OF THE ACT FROM ICICI BANK, HOME LOAN BRANCH WITH REGARD TO HOME LOAN GIVEN TO THE ASSESSEE AND HER HUSBAND EXPLAINS THAT THE REPAYMENT OF LOAN HAS BEE N MADE FROM THE ASSESSEES ACCOUNT WITH KARUR VYSYA BANK, ROHINI BRANCH. FROM THE STATEMENT OF AUTHORIZED REPRESENTATIVE OF ICICI BANK, THE CIT(A) ALSO NOTICED THAT IN THE CASE OF LOAN TAKEN BY LADIES, BANK HAS A POLICY OF INCLUDING NAMES OF THEIR HUSBAND WHICH APPEAR FIRST AND THE NAME OF THE FEMA LE ASSESSEE APPEARS LATER IN THE LOAN DOCUMENT. THE CIT(A) ALSO OBSERVED THAT T HE LOAN TAKEN BY THE ASSESSEE FROM ICICI BANK WAS OF RS. 85 LAKH AND IMP UGNED INTEREST OF RS.12,82,571 WAS PAID TO THE BANK FROM HER BANK ACC OUNT IN KARUR VYSYA BANK, ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 9 THEREFORE, THE BENEFIT OF CAPITALIZATION OF THIS IN TEREST CANNOT BE DENIED. THE MAIN CONTENTION OF THE REVENUE IS THAT WHEN THE PRO PERTY WAS PURCHASED MUCH EARLIER AT THE COST OF RS.63,68,450, THEN THE INTER EST PAID BY THE ASSESSEE ON SUBSEQUENT LOAN FROM ICICI BANK ON LOAN AMOUNT OF R S. 85 LAKH CANNOT BE ALLOWED TO BE CAPITALIZATION WHILE DEDUCTING CAPITA L GAIN ON SALE OF SAID PROPERTY. 13. FROM THE FIRST APPELLATE ORDER IN PARA 4.4 AT P AGE 5-6 WE NOTE THAT THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE BY OBSERVING AS UNDER:- 4.4 IN THE FOURTH GROUND OF APPEAL, THE APPELLANT HAS IMPUGNED THE ADDITION OF RS.12,82,571/- BEING INTER EST PAID TO BANK ON LOAN TAKEN BY THE APPELLANT AGAINST PROPERT Y BEARING NO. 163, DEEPALI, PITAMPURA, DELHI ON THE GROUNDS THAT THE LOAN WAS TAKEN BY ASSESSEE'S HUSBAND SH. AJAY KUMAR BANSAL, PAN NO. AEIPB 2506A FOR A.Y. 2009-10. THE ID. AR .OF THE AP PELLANT SUBMITTED AN AFFIDAVIT FROM SH. AJAY KUMAR BANSAL, HUSBAND OF THE APPELLANT IN SUPPORT OF THE FACT THAT HE HAD NO T CLAIMED THE BENEFIT OF THIS INTEREST MADE TO THE BANK IN HIS RE TURN OF INCOME. FURTHER, AS PROOF, HE SUBMITTED A COPY OF HIS RETUR N OF INCOME ALONG WITH HIS ASSESSMENT ORDER U/S 143(3) FOR A.Y. 2009-10 PASSED BY ITO WARD 21(3), NEW DELHI. FURTHER, EVIDE NCE WAS ALSO GATHERED U/S 133(6) OF THE ACT FROM ICICI BANK , HOME LOAN BRANCH WITH REGARDS TO HOME LOAN GIVEN TO SH. AJAY BANSAL AND SMT. REKHA BANSAL, WHEREIN, THE AUTHORISED REPRESEN TATIVE OF ICICI BANK LTD. HAS STATED THAT 'THE REPAYMENT OF T HE LOAN HAS BEEN MADE FROM THE REKHA BANSAL ACCOUNT WITH THE KA RUR VYSYA BANK LTD., ROHINI BRANCH' AND THAT 'IT IS GENERALLY TRUE THAT IN CASE OF THE LOAN TAKEN BY LADIES 'IF THE PROPERTY I S IN THE NAME OF LADIES', THE BANK HAS A POLICY OF INCLUDING THE NAM ES OF THEIR HUSBANDS AND THE NAMES OF THE HUSBANDS APPEARS FIRS T AND THE NAMES OF THEIR WIVES APPEAR LATER IN THE LOAN DOCUM ENT.' IN THE LIGHT OF THE ABOVE EVIDENCE, IT IS CLEAR THAT THE L OAN WAS TAKEN BY THE APPELLANT FROM ICICI BANK FOR AN AMOUNT OF RS.8 5 LACS AND THAT THE INTEREST OF RS.12,82,571/- WAS PAID TO THE BANK FROM HER ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 10 ACCOUNT IN KARUR VYSYA BANK LTD. THEREFORE, SHE CAN NOT BE DENIED THE BENEFIT OF CAPITALIZING THIS INTEREST AN D REDUCE IT THE SAME FROM THE SALE CONSIDERATION OF THE PROPERTY. A CCORDINGLY, THIS ADDITION TO THE INCOME OF THE APPELLANT UNDER THE HEAD CAPITAL GAINS IS HEREBY DELETED. ALTHOUGH, THE AO H AS CORRECTLY CHARGED THE SHORT TERM CAPITAL GAINS ON PURCHASE AN D SALE OF PROPERTIES UNDER THE APPROPRIATE HEAD 'CAPITAL GAIN S' RATHER THAN UNDER THE HEAD 'OTHER SOURCES' AS RETURNED BY THE APPELLANT, BY SHOWING HER INCOME OF RS.3,56,169/- A S MISCELLANEOUS INCOME. 14. IN VIEW OF ABOVE, WE OBSERVE THAT THE AO DENIED CAPITALIZATION OF THE INTEREST WHILE CALCULATING CAPITAL GAIN BECAUSE PER HAPS THERE WAS A CONFUSION REGARDING NAME OF THE HOME LOAN ACCOUNT WHEREIN THE NAME OF ASSESSEES HUSBAND APPEARED FIRST WHICH CREATED DOUBT IN THE M IND OF THE AO, HOWEVER, THE CIT(A) CALLED AND GATHERED REQUIRED EVIDENCE AND IN FORMATION BY INVOKING PROVISIONS OF SECTION 133(6) OF THE ACT FROM ICICI BANK WHEREIN IT WAS REVEALED THAT THE LOAN WAS TAKEN JOINTLY BY THE ASS ESSEE AND HER HUSBAND AMOUNTING TO RS. 85 LAKH AND IMPUGNED INTEREST WAS PAID TO THE BANK FROM THE ASSESSEES BANK ACCOUNT IN KARUR VYSYA BANK LTD. A T THIS JUNCTURE, WE RESPECTFULLY TAKE COGNIZANCE OF THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF C IT VS MITHILESH KUMAR REPORTED IN 92 ITR 09 (DEL) WHEREIN IT WAS HELD THAT THE ASSESSEE IN ORDER TO PURCHASE THE LAND HAD NOT ONLY TO BORROW THE AMOUNT OF RS.95,000 WHICH WAS THE CONSIDERATION FOR THE PURCHASE OF THE LAND BUT ALSO HAD TO PAY INTEREST OF RS.16,878/- ON THE AMOUNT BORROWED BY HER, THEREFOR E, THE AMOUNT OF ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 11 CONSIDERATION PLUS THE INTEREST PAID BY THE ASSESSE E CONSTITUTES THE ACTUAL COST OF THE LAND. 15. WHEN WE CONSIDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, RESPECTFULLY FOLLOWING THE DICTA LAID DOWN BY THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS MITHILESH KUMAR (SUPRA) , WE HOLD THAT THE ASSESSEE IS ENTITLED FOR CAPITALIZATION OF INTEREST ACTUALLY PAID BY THE ASSESSEE ON THE LOAN TAKEN FOR PURCHASE OF SAID PROPERTY PROVIDED THE IN TEREST SO PROPOSED TO BE CAPITALIZED IS NOT CLAIMED AS DEDUCTION UNDER THE H EAD OF INCOME FROM HOUSE PROPERTY. WE ARE ALSO OF THE CONSIDERED VIEW THAT THE CALCULATION AND VERIFICATION OF THE INTEREST FOR THE PERIOD BETWEEN DATE OF ACQUISITION AND DATE OF SALE OF PROPERTY HAS TO BE DONE AT THE END OF AO. THEREFORE, WE REACH TO A LOGICAL CONCLUSION THAT THE AO WAS NOT CORRECT IN D ENYING THE CAPITALIZATION OF INTEREST PERTAINING TO THE AMOUNT WHICH WAS ACTUALL Y INVESTED TOWARDS PURCHASE OF PROPERTY FOR THE PERIOD BETWEEN THE DATE OF ACQU ISITION AND DATE OF SALE OF PROPERTY. AT THE SAME TIME, WE FURTHER HOLD THAT T HE CIT(A) WAS ALSO NOT JUSTIFIED AND CORRECT IN DIRECTING THE AO FOR CAPI TALIZATION OF ENTIRE AMOUNT OF INTEREST AND TO REDUCE IT FROM THE SALE CONSIDERATI ON OF PROPERTY AT THE TIME OF CALCULATING CAPITAL GAINS BECAUSE THE ASSESSEE OBTA INED LOAN OF RS.85 LAKH JOINTLY WITH HER HUSBAND , A PART THEREFROM WHICH W AS UTILIZED FOR REPAYMENT OF HOME LOAN WHICH WAS ORIGINALLY OBTAINED AT THE TIME OF PURCHASE OF PROPERTY. IN VIEW OF ABOVE CONCLUSION OF THE AO AS WELL AS FINDI NGS OF THE CIT(A) BEING NOT ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 12 COMPLETELY SUSTAINABLE AND IN ACCORDANCE WITH LAW, THIS ISSUE IS RESTORED TO THE FILE OF AO FOR A FRESH ADJUDICATION IN THE LIGHT OF RELEVANT PROVISIONS OF THE ACT AND IN ACCORDANCE WITH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE AO IS DIRECTED TO ALLOW THE INTEREST ON THE LOAN RAISED F OR PURCHASE OF PROPERTY AND REPAYMENT OF PROPERTY LOAN WHICH WAS UTILIZED FOR T HE PURPOSE OF ACQUISITION OF PROPERTY IN QUESTION SUBJECT TO VERIFICATION OF FOL LOWING FACTS:- I) THE CALCULATION AND VERIFICATION OF INTEREST FOR T HE PERIOD BETWEEN THE DATE OF ACQUISITION OF PROPERTY AND DATE OF SAL E OF SAID PROPERTY, ACTUALLY PERTAINS TO THE AMOUNT OF CONSIDERATION/CO ST OF ACQUISITION AT THE TIME OF PURCHASE OF PROPERTY BY THE ASSESSEE . II) THE AO WOULD ALLOW THE CAPITALIZATION OF INTEREST S UBJECT TO CONDITION THAT THE SAME WAS NOT CLAIMED BY THE ASSE SSEE AS DEDUCTION DURING THE RELEVANT FINANCIAL PERIODS FOR CALCULATION OF INCOME UNDER THE HEAD OF INCOME FROM HOUSE PROPERT Y. ACCORDINGLY, ADDITIONAL GROUND NO. 2 OF THE RE VENUE IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES FOR THE LIMITED PURPOSE AS INDICATED ABOVE. C.O. NO. 43/DEL/14 OF THE ASSESSEE 16. AT THE OUTSET, LD. AR SUBMITTED THAT CO NO. 1 A ND 4 ARE GENERAL IN NATURE AND ASSESSEE DOES NOT WANT TO PRESS CO NO. 3, THERE FORE, THE SAME ARE DISMISSED AS NOT PRESSED. THE REMAINING SOLE CO NO. 2 OF THE ASSESSEE READS AS UNDER:- ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 13 2. THE LD. AO HAS ERRED IN LAW AND FACTS WHILE CO NFIRMING THE ADDITION OF RS.3,92,000/- TO THE RETURNED INCOME AN D NOT ALLOWING THE CLAIM OF VACANCY ALLOWANCE. 17. APROPOS SOLE CO OF THE ASSESSEE, WE HAVE HEAR D ARGUMENT OF BOTH THE SIDES AND CAREFULLY PERUSED THE MATERIAL PLACED ON RECORD INTER ALIA FINDINGS AND OBSERVATIONS OF THE AO AS WELL AS CONCLUSION OF THE CIT(A) IN THE IMPUGNED FIRST APPELLATE ORDER. LD. AR VEHEMENTLY CONTENDED THAT THE CIT(A) HAS ERRED IN LAW AND FACTS WHILE CONFIRMING THE ADDITION OF R S.3,92,000/- TO THE RETURNED INCOME AND NOT ALLOWING THE CLAIM OF VACANCY ALLOWA NCE. LD. AR HAS ALSO DRAWN OUR ATTENTION TOWARDS COPY OF THE RENT AGREEM ENT BETWEEN THE ASSESSEE AND THE TENANT M/S CROSS ROAD LOGISTICS PVT. LTD. D ATED 1.11.2008 AND SUBMITTED THAT THE PROPERTY WAS RENTED OUT ONLY FOR THE PERIOD OF FIVE MONTHS I.E. FROM 1.11.2008 TO 31.3.2009 AND FOR THE REMAINING S EVEN MONTHS, THE PROPERTY WAS LYING VACANT AS THE SAME WAS NOT READY FOR USE PRIOR TO THIS PERIOD. LD. AR ALSO SUBMITTED THAT THE AO MADE ADDITION ON THE BAS IS OF PURE GUESSWORK, SURMISES AND CONJECTURES WHICH WAS NOT SUSTAINABLE BUT THE CIT(A) UPHELD THE SAID ADDITION WITHOUT APPLICATION OF MIND AND FOR W ANT OF PROPER EVIDENCE WHICH COULD ONLY BE SUBMITTED IN THE FORM OF NEGATI VE EVIDENCE. LD. AR SUBMITTED THAT THE IMPUGNED ADDITION MAY KINDLY BE DIRECTED TO BE DELETED AS THE PROPERTY HAD REMAINED VACANT FOR FIRST SEVEN MO NTHS OF THE FINANCIAL YEAR I.E. 1.4.2008 TO 31.10.2008. ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 14 18. LD. DR SUPPORTING THE ACTION OF THE AO AND IM PUGNED ORDER SUBMITTED THAT THE ASSESSEE WAS ALLOWED REPEATED OPPORTUNITY TO PR ODUCE ANY KIND OF EVIDENCE TO PROVE THAT THE PROPERTY HAD ACTUALLY REMAINED VA CANT FOR THE PERIOD OF SEVEN MONTHS BUT THE ASSESSEE FAILED TO PRODUCE ANY COGEN T EVIDENCE TO SUPPORT VACANCY OF SEVEN MONTHS, THEREFORE, THE AO WAS RIGH T IN MAKING ADDITION WHICH WAS RIGHTLY UPHELD BY THE CIT(A). 19. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, FROM THE COPY OF THE RENT AGREEMENT, ADMITTEDLY AND UNDISPUTEDLY, WE NOTE THA T THE PROPERTY WAS RENTED BY THE ASSESSEE TO M/S CROSS ROAD LOGISTICS PVT. LT D. FOR THE PERIOD STARTING FROM 1.11.2008 TO 31.3.2009 AND THE ASSESSEE OFFERE D TO TAX THE RENTAL INCOME ARISING THEREFROM. THE DISPUTE AROSE WHEN THE AO N OTED THAT THE PROPERTY WAS KEPT VACANT FOR SEVEN MONTHS AND ASKED THE ASSESSEE TO SUBMIT EVIDENCE TO SUPPORT VACANCY OF SEVEN MONTHS. THE AO MADE IMPUG NED ADDITION BY HOLDING THAT THE ANNUAL RENTAL VALUE OF THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET OUT FROM YEAR TO YEAR. THE AO GRANTED DEDUCTION @3 0% U/S 24(A) OF THE ACT AND CALCULATED THE NET PROPERTY INCOME AT RS.6,72,0 00 AND AFTER DEDUCTING RENTAL INCOME SHOWN BY THE ASSESSEE FROM HOUSE PROPERTY AT RS. 2,80,000/-, THE AO MADE IMPUGNED ADDITION OF RS.3,92,000 TO THE RETURN ED INCOME OF THE ASSESSEE. ON APPEAL BY THE ASSESSEE, THE CIT(A) UPHELD AND CO NFIRMED THE ADDITION FOR WANT OF PROPER EVIDENCE. ABOUT THE FACT OF VACANCY OF SEVEN MONTHS, ON CAREFUL CONSIDERATION OF OBSERVATIONS AND FINDINGS OF THE A UTHORITIES BELOW, WE NOTE THAT ITA NO.4455/D/13 & CO 43/D/14 ASSTT.YEAR: 2009-10 15 TAX CAN ONLY BE IMPOSED ON THE RENTAL INCOME ACTUAL LY EARNED BY THE ASSESSEE. THE RENTAL INCOME FROM HOUSE PROPERTY CANNOT BE ADM ITTED FOR WANT OF NEGATIVE EVIDENCE ABOUT THE VACANCY PERIOD OF THE PROPERTY U NDER CONSIDERATION. IN THIS SITUATION, WE ARE OF THE CONSIDERED VIEW THAT THE I SSUE REQUIRES PROPER VERIFICATION AND EXAMINATION AT THE END OF AO AND WE RESTORE THIS ISSUE TO THE FILE OF AO WITH A DIRECTION THAT THE AO SHALL VERIF Y AND EXAMINE THE ISSUE AFRESH AFTER AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE AND WITHOUT BEING PREJUDICED FROM THE EARLIER ASSESSMENT AND IMPUGNED ORDER ON THIS ISSUE. ACCORDINGLY, CROSS OBJECTION NO. 2 OF THE ASSESSEE IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. 20. IN THE RESULT, GROUND NO. 1, 2 AND 3 OF THE REV ENUE ARE DISMISSED AND THE ADDITIONAL GROUND OF THE REVENUE AS WELL AS CO NO.2 OF THE ASSESSEE IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES IN THE MANNE R AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 14.8.2015. SD/- SD/- (R.S. SYAL) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 14 TH AUGUST 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT BY ORDER 3. C.I.T.(A) 4. C.I.T. 5. DR ASSTT.REGISTRAR