ITO, New Delhi V. M/s. XPS Services Ltd., New Delhi

ITA 1178/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69210 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 13-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SAMEER SARMA
• Keywords: Business income; Opportunity of being heard; Principle of natural justice

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I : NEW DELHI BEFORE SHRI R. P. TOLANI, JUDICIAL MEMBER AND SHRI B. C. MEENA , ACCOUNTANT MEMBER ITA NO. 1178 /DEL/ 2012 ASSESSMENT YEAR: 2008 - 09 ITO, WARD 18(4), ROOM NO. 248, C. R. BUILDING, I. P. ESTATE, NEW DELHI 110002 VS. XPS SERVICES LTD., 10TCI HOUSE, RAM BAGH, OLD ROHTAK ROAD, AZAD MARKET, NEW DELHI PAN AAACX0254C (RESPONDENT) (APPELLANT) C. O. NO. 158/DEL/2012 (IN ITA NO. 1178 /DEL/ 2012) ASSESSMENT YEAR: 2008 - 09 XPS SERVICES LTD., 10TCI HOUSE, RAM BAGH, OLD ROHTAK ROAD, AZAD MARKET, NEW DELHI PAN AAACX0254C VS. ITO, WARD 18(4), ROOM NO. 248, C. R. BUILDING, I. P. ESTATE, NEW DELHI 110002 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RANJAN CHOPRA, CA RESPONDENT BY: SHRI SAMEER SARMA, SR. DR O R D E R PER B. C. MEENA, AM THE APPEAL HAS BEEN FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF LD. CIT(A), XXI, NEW DELHI DATED 29.12.2011. PAGE NO. 2 ITA NO. 5753/DEL/2012 2. THE ASSESSEE IS IN APPE AL BEFORE US BY TAKING THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCES OF RS. 32,46,211,/ - TO RS. 11,42,509/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CAPITALIZATION OF INTEREST ON TERM LOAN USED FOR CONSTRUCTI ON OF BUILDING. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE YEAR IN WHICH THE LOAN WAS RAISED IS IRRELEVANT SO FAR AS THE ISSUE OF ALLOWING THE EXPENDITURE WHICH IS OF A CAPITAL NA TURE IS CONCERNED. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF APPEAL. 4. THE GROUNDS OF CROSS OBJECTIONS ARE READ AS UNDER: - 1. THAT ORDER OF LEARNED CIT(AS) PARTLY SUSTAINING THE ORDER OF LEARNED ASSESSING OFFICER IS BAD IN LAW AND ON FACTS AND IS LIABLE TO BE SET - ASIDE. 2. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS BY ONLY PARTIALLY ALLOWING THE INTEREST PAID ON LOAN TO T HE EXTENT OF RS. 20,93,702/ - AS AGAINST CLAIM OF RS. 32,46,211/ - MADE BY THE APPELLANT U/S 24)B) OF THE INCOME TAX ACT, 1961 UNDER THE HEAD INCOME FROM HOUSE PROPERTY . 3. THAT THE ORDER PASSED BY LEARNED CIT(A) IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 4. THAT THE RESPONDENT PRAYS FOR LEAVE TO ADD, ALTER, AMEND OR DELETE THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 5. THE LD CIT(A) PARTLY GRANTED THE ASSESSEE APPEAL BY HOLDING AS UNDER: - 3.3 THE LD AR OF THE APPELLANT HAS AL SO RELIED ON THE CASE LAWS AND DEPARTMENTAL CIRCULARS. 3.4 I HAVE GONE THROUGH THE FINDING OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND WRITTEN SUBMISSION FILED BY THE LD. AR. IN MY CONSIDERED OPINION IN THE GROUNDS OF APPEAL, PAGE NO. 3 ITA NO. 5753/DEL/2012 APPELLANT HAS TAKEN THE PLEA THAT CAPITALIZATION OF INTEREST TO THE TUNE OF RS. 32,46,211/ - IS ON THE HIGHER SIDE AND IT NEEDS TO BE REDUCED. IN THIS REGARD LD. AR OF THE APPELLANT HAS GIVEN HIS WORKING AS PER WHICH OUT OF TOTAL INTEREST PAID AMOUNTING TO RS. 32,46,211/ - , A S UM OF RS. 20,93,702/ - RELATES TO LOAN TAKEN IN EARLIER YEAR. SO, IT CANNOT BE DISALLOWED. FROM THE GROUNDS APPEAL TAKEN AND SUBMISSION OF THE LD. AR IT APPEARS THAT ISSUE HAS BEEN CRYSTALLIZED THAT DISALLOWANCE IS ON THE HIGHER SIDE, THUS, THE ACTION OF AS SESSING OFFICER MAKING DISALLOWANCE ON ACCOUNT OF INTEREST PAID. SO, ISSUE IS BEING DECIDED IN THE LIGHT OF THE OF THE OBSERVATION OF THE ASSESSING OFFICER AND SUBMISSION OF THE LD. AR OF THE APPELLANT AND AFTER TAKING INTO TOTALITY OF THE CIRCUMSTANCES, I FOUND THAT ASSESSEE HAS CLAIMED AMOUNT OF RS. 32,46,211/ - AS INTEREST PAYABLE U/S. 24(B) OF THE IT ACT AGAINST THE INCOME FROM HOUSE PROPERTY. IN THIS REGARD ASSESSING OFFICER HAS DECIDED THAT TOTAL SUB TO BE CAPITALIZED TO THE BUILDING ACCOUNT WHICH H AS BEEN SHOWN AS UNDER CONSTRUCTION. SO, IN MY CONSIDERED OPINION INTEREST PAYABLE FOR THE YEAR UNDER CONSIDERATION FOR THE RELEVANT YEAR I.E. FOR THE ASSESSMENT YEAR 2008 - 09 CAN BE ADDED AND NOT THE INTEREST WHICH HAS BEEN PAID FOR THE EARLIER YEARS LOAN . ACCORDINGLY, DISALLOWANCE SHOULD BE RESTRICTED TO THE TUNE OF RS. 32,46,211/ - ( - ) RS. 20,93,702/ - = RS. 11,52,509/ - . SO, ADDITION OF RS. 32,46,211/ - US RESTRICTED TO RS. 11,52,509/ - . ACCORDINGLY, APPELLANT GETS PART RELIED. GROUNDS NO. 1 AND @ ARE PARTLY ALLOWED. 6. DURING THE HEARING THE LD AR DRAW OUR ATTENTION TO THE COMPUTATION INCOME WHEREIN THE AMOUNT OF INTEREST HAS BEEN ADDED BACK TO THE BUSINESS INCOME AND CLAIMED FROM THE INCOME OF HOUSE PROPERTY. LD AR SUBMITTED THAT NO BUILDING WAS UNDER CONSTRUCTION DURING THE YEAR. HENCE, THERE IS NO QUESTION OF CAPITALIZATION OF INTEREST. THE LD CIT(A) HAS WRONGLY REFERRED THAT THE BUILDING WAS UNDER CONSTRUCTION DURING THE RELEVANT PERIOD. THE LD. AR SUBMITTED THAT THERE WAS NO BUILDING UNDER CONSTRUCTION DURING THE RELEVANT PERIOD . FURTHER, LOAN W AS TAKEN TO REPAY THE EARLIER PAGE NO. 4 ITA NO. 5753/DEL/2012 LOANS. DURING THE YEAR IT WAS ONLY SWAPPING OF THE LOAN S FROM ONE INSTITUTION TO THE OTHER . THE FACTS RECORDED BY THE AUTHORITIES BELOW ARE NOT CORRECT FACTS. LD AR PLEADED TO RESTORE THE ISSUE TO THE FILE OF ASSESSING OFFICER. WE ALSO HEARD LD DR ON THIS ISSUE OF RESTORING TO ASSESSING OFFICER. WE NOTE THAT CORRECT FACT HAS NOT COME O N THE RECORD S TO DECIDE THE ALLOWABILITY OF THE INTERES T CLAIMED BY THE ASSESSEE. 7. IN VIEW OF THE THESE FACTS WE FIND IT APPROPRIATE THAT THIS ISSUE NEEDS TO BE RESTORED AT THE LEVEL OF ASSESSING OFFICER TO BRING OUT CORRECT FACTS ON THE RECORD. CONSIDERING THESE FACTS THE MATTER IS RESTORED BACK TO THE FIL E OF THE ASSESSING OFFICER TO DECIDE AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT THE APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 4 .08.2013 . - S D / - - S D / - (R. P. TOLANI ) (SHRI B. C. MEENA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 1 4 /08/2013 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI