Ms. Preneet Sandhu, Chandigarh V. JCIT (OSD), Chandigarh

ITA 1011/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68597 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1011/CHD/2013 ASSESSMENT YEAR : 2009-10 MS. PRENEET SANDHU VS. J.C.I.T. (OSD) H NO. 13, SECTOR 8A (INTERNATIONAL CHANDIGARH TAXATION) AOXPS 4312J CHANDIGARH (APPELLANT) (RESPONDENT) APPELLANT BY SHRI M.R.SHARMA RESPONDENT BY: SHRI J.S. NAGAR DATE OF HEARING 4.12.2013 DATE OF PRONOUNCEMENT 23.12.2013 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 2. 9.2013 OF THE LD. CIT(A), CHANDIGARH. 2 IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING EFFECTIVE GROUNDS. THAT THE ORDER OF ASSESSING OFFICER IS UPHELD BY T HE LD. CIT(A) CHANDIGARH DISALLOWING THE CLAIM OF THE APPELLANT O N ACCOUNT OF INTEREST PAID ON LOAN AT RS. 5,80,046/- TO LIC HOUS ING FINANCE LTD U/S 57(III) AGAINST THE INCOME ON ACCOUNT OF INTE REST AT RS. 7,10,580/- RECEIVED BY THE APPELLANT ON HER INVESTM ENT WITH SPAZE PLATINUM, GURGAON IS BAD IN LAW AND NEEDS TO BE SET ASIDE. 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURIN G ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASS ESSEE HAD DEPOSITED A SUM OF RS. 62,85,900/- WITH THE COMPANY FOR BOOKING IN THEIR PLATINUM PROJECT. SINCE THE COMPA NY COULD NOT DELIVER THE POSSESSION OF THE FLAT IN TIME, THE COM PANY STARTED PAYING INTEREST @ RS. 52,506/-. THE ASSESSEE HAS S HOWN THE SAME AS INCOME. HOWEVER, DURING THE COMPUTATION TH E 2 ASSESSEE HAS CLAIMED INTEREST AMOUNTING TO RS. 5,80 ,046/- PAID TO LIC AGAINST THE LOAN TAKEN FOR THE PURPOSE OF ACQUIRING THE SAID FLAT. THE ASSESSING OFFICER WAS OF THE OP INION THAT INTEREST SHOULD HAVE BEEN CAPITALIZED BY THE ASSESS EE BECAUSE THE SAME WAS FOR ACQUISITION OF THE FLAT. THEREFO RE, DEDUCTION CANNOT BE ALLOWED. ACCORDINGLY HE DID NOT ALLOW D EDUCTION. 4 ON APPEAL THE DISALLOWANCE WAS CONFIRMED BY THE L D. CIT(A). 5 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAD BOOKED THE FLAT WITH SPAZE PLATINU M, GURGAON AND A MEMORANDUM OF UNDERSTANDING WAS SIGNE D WITH THEM (COPY OF WHICH IS PLACED AT PAGE 3 TO 6 OF THE PAPER BOOK). HE REFERRED TO CLAUSE 7 AND POINTED OUT THA T IT WAS ASSURED BY THE BUILDERS THAT IN CASE THE POSSESSION IS NOT GIVEN IN TIME OR THE FLAT IS NOT RENTED OUT THEN TH EY WOULD PAY RS. 65/- PER SQFT PER MONTH AND THE INTEREST HAS BE EN PAID IN TERMS OF THIS CLAUSE. HE SUBMITTED THAT THE ASSESS ING OFFICER HAS NOT DENIED THE FACT OF TAKING LOAN FROM THE LIC , THEREFORE, THE INCOME RECEIVED FROM THE BUILDER HAS DIRECT NEX US WITH THE FLAT BOOKING BY THE ASSESSEE FOR WHICH LOAN WAS TAK EN. HE ALSO RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF HON'BLE SUPREME COURT IN CASE OF RAJENDRA PRASAD MO ODY VS. CIT, 115 ITR 519 (S.C). 6 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE STR ONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER AND THE LD . CIT(A). 7 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THE ASSESSEE HAS BOOKED FLAT WITH SPAZE PLATINUM, GURGA ON. CLAUSE 7 OF MEMORANDUM OF UNDERSTANDING READS AS UN DER: CLAUSE 7 THAT SINCE THE FIRST PARTY(S) HAS, AS I N CLAUSE 2, GUARANTEED THE SECOND PARTY(S) AN INVESTMENT RETURN OF RS. 65/- PER SQFT PER MONTH OF THE PROPOSED PREMISES (SUPER AREA BASIS), THE FIRST PARTY IN FULFILLMENT OF ITS ABOVE REFERRE D GUARANTEE, HEREBY COVENANTS WITH THE SECOND PARTY(S) THAT IN T HE EVENT THE PROPOSED PREMISES ARE LEASED AT A GROSS MONTHLY REN TAL OF LESS THAN THE INVESTMENT RETURN OF RS. 65/- PER SQ. FT P ER MONTH, THEN THE FIRST PARTY AGREES THAT THE SALE CONSIDERATION FOR THE PROPOSED PREMISES SHALL STAND REDUCED BY THE AMOUNT CALCULATED BY THE FORMULA GIVEN BELOW( ASSURED MONTHLY RETURN OF RS. 65/- PER SQ. F T. (LESS) ACTUAL MONTHLY RENTAL (IF LESS THAN RS. 65/- PER MONTH )= RS. A MULTIPLIED BY RS. 109.09/- PER SQ FT), TOWARDS AND BY WAY OF COMPENSA TION TO THE SECOND PARTY(S) FOR THE LOWER RENTAL THAN GUARANTEED. IN C ASE THE PROPOSED 3 PREMISES ARE LEASED OUT BY THE FIRST PARTY SO AS TO GIVE A MONTHLY RENTAL IN EXCESS OF THE INVESTMENT RETURN OF RS. 65/-PER.S Q.FT OF SUPER AREA GIVEN HEREIN THE AGREED SALE CONSIDERATION OF THE P ROPOSED PREMISES SHALL STAND INCREASED BY THE AMOUNT CALCULATED BY T HE FORMULA GIVEN BELOW(ACTUAL MONTHLY RENTAL-(LESS) ASSURED MONTHLY RETURN OF RS. 65/- PER SQ FT= RS A/2 AND MULTIPLIED BY RS. 109.09/- PER SQ FT), THAT MEANS IN THAT CASE THE ENHANCE OF INCREMENTAL RENT WOULD BE EQUAL LY SHARED BETWEEN SECOND PARTY(S) & THE DEVELOPER. THE INCREASED SALE CONSIDERATION WOULD BE PAYABLE FORTHWITH BY THE SECOND PARTY(S) T O THE FIRST PARTY. IN THE EVENT OF FAILURE OF THE SECOND PARTY(S) TO PAY THE AFORESAID INCREASED CONSIDERATION, THE SECOND PARTY(S) SHALL NOT ENTITL ED TO ANY INVESTMENT RETURN FROM THE FIRST PARTY(S) OR LEASE RENT FROM T HE LESSEES OF THE PREMISES AND THE FIRST PARTY(S) SHALL APPROPRIATE T HE LEASE RENT TILL SUCH TIME THE SECOND PARTY(S) MAKES PAYMENT OF THE INCRE ASED SALE CONSIDERATION. THE RIGHT, TITLE AND INTEREST OF THE SECOND PARTY(S) IN THE PROPOSED PREMISES SHALL REMAIN SUSPENDED TILL THE T IME OF PAYMENT OF INCREASED SALE CONSIDERATION. IT IS FURTHER AGREED BETWEEN THE PARTIES THAT THE RENT RECEIVED BY THE FIRST PARTY(S) SHALL NOT BE ADJUSTED TOWARDS INCREASED SALE CONSIDERATION AND THE RECEIPT OF REN T BY THE FIRST PARTY (S) SHALL BE HIS INCOME. ABOVE CLEARLY SHOWS THAT SPAZE PLATINUM, GURGAON HA D ASSURED THE RETURN OF RS. 65/- PER SQFT PER MONTH I F THE POSSESSION WAS NOT GIVEN IN TIME OR THE FLAT WAS NO T LEASED OUT. THEREFORE, INCOME IS DIRECTLY LINKED TO THE FLAT B OOKED BY THE ASSESSEE FOR WHICH THE ASSESSEE HAS OBTAINED THE LO AN. IN OUR OPINION, THERE IS DIRECT NEXUS BETWEEN THE INTEREST PAID BY THE ASSESSEE AND THE INCOME RECEIVED BY THE ASSESSEE AN D THEREFORE, INTEREST SHOULD HAVE BEEN ALLOWED. ACC ORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT TH E AO TO ALLOW INTEREST ON HOUSING LOAN TAKEN FROM THE LIC. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 23.12.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23.12.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 4