Sandhya Ware House, Ghandhidham V. The Income tax Officer,Ward-4, Palanpur

ITA 1204/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9938 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-09-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JHA SRDR
• Assessee Lawyers: M K PATAL
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH SMC AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.1204/AHD/2010 ASSESSMENT YEAR:2007-08 DATE OF HEARING:7.9.10 DRAFTED:7.9.10 SANDHYA WARE HOUSE, DBZ, SOUTH-157, ZANDA CHAWK, GANDHIDHAM, PAN NO.AAWFS2744P V/S . INCOME TAX OFFICER, WARD-4, PALANPUR (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI M.K. PATAL, AR RESPONDENT BY:- SHRI S.K.JHA, SR-DR O R D E R THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDE R OF COMMISSION OF INCOME-TAX (APPEALS)-XV, AHMEDABAD IN APPEAL NO. CI T(A)- XV/WD.4/PLN/347/08-09 DATED 27-01-2010. THE ASSESSM ENT WAS FRAMED BY ITO, WARD-4, PALANPUR U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 26-1 2-2008 FOR ASSESSMENT YEAR 2007-08. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF INTEREST PAYMENT OF RS.2,37,901/-. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING TWO GROUNDS :- 1) THAT THE LEARNED CIT(A) ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ADDITION OF RS.2,37,901=00 MADE BY A.O WITHOUT PROP ERLY APPRECIATING THE EXPLANATION AND SUBMISSION MADE BY THE APPELLAN T. ITA NO.1204/AHD/2010 A.Y. 2007-08 SANDHYA WARE HOUSE V. ITO WD-4 PLN PAGE-2 2) THAT THE LEARNED CIT(A) ERRED IN NOT APPRECIATIN G THE FACT THAT INTEREST PAYMENT IS AN ADMISSIBLE DEDUCTION AGAINST THE PROP ERTY INCOME AND INTEREST PAID ON FRESH LOAN TAKEN FOR REPAYMENT OF EARLIER LOAN IS ALSO AN ADMISSIBLE DEDUCTION. 3. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE, SHRI M.K. PATEL REFERRED TO THE ASSESSEES REPLY RECORDED IN THE ASSESSMENT ORD ER AND THE RELEVANT REPLY IS BEING REPRODUCED FOR THE SAKE OF CLARITY:- WE HAVE TAKEN LOAN OF RS.40,50,000/- FROM HDFC BAN K. WE HAVE ALREADY PAID INTEREST ON LOAN AGAINST PROPERLY OF A /C NO.2691971; RS.237901/- COPY OF CONFIRMATION FROM HDC BANK IS S UBMITTED HEREWITH YOU ARE REQUESTED TO ALLOW THE INTEREST PAID OF RS.2,37,901/- LOAN AGAINST PROPERLY. CIRCULAR NO.363 DATED 24/6/1983 I S VERY CLEAR & OUR INTEREST SHOULD BE ALLOWED U/S.2(B) OF THE I.T. ACT . WE HAVE ONLY INCOME IS PROPERLY INCOME & NOT OTHE R INCOME AMOUNT OF LOAN IS USED IN PURPOSE OF EARNING PROPERLY INCO ME. EVERY MONTH WE HAVE PAID INTEREST. OUR INTENTION IS CLEAR THAT WE HAVE NOT SUFFICIENT FUND TO BUILD THE PROPERTY. SO FAR WE HAVE TAKEN LOAN & WE HAVE PAID THE INTEREST. THE HDFC LOAN IS UTILIZED FOR THE PURPOSE OF REP AYMENT OF CAPITAL OF PARTNERS AND OTHERS LOANS. THUS THE LOAN BEING UTIL IZED FOR REPAYMENT OF OTHER INTEREST BEARING LOAN, THE INTEREST PAYMENT I S ADMISSIBLE. THE RATE OF INT. OF HDFC IS 11.50% WHILE INTEREST ON CAPITAL OF PARTNER TO BE PAID AS PER PARTNERSHIPS DEED IS 12%. LD. COUNSEL FOR THE ASSESSEE, SHRI PATEL FURTHER ST ATED THAT THE ASSESSING OFFICER HAS NOT EXAMINED, WHETHER THE REPAYMENT OF LOAN TO THE PARTNERS AFTER TAKING LOAN FROM HDFC, IS INVESTED IN THE PURCHASE OF PROPERTY I.E. LOAN TAKEN FROM THE PARTNERS. LD. SR-DR, SHRI S.K. JHA ALSO AG REED LET THIS ISSUE BE EXAMINED BY ASSESSING OFFICER. ITA NO.1204/AHD/2010 A.Y. 2007-08 SANDHYA WARE HOUSE V. ITO WD-4 PLN PAGE-2 4. HAVING HEARD THE RIVAL CONTENTIONS AND GOING THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE, I FIND THAT PRINCIPALLY INTEREST IS ALLOWABLE BUT THE AO HAS TO EXAMINE WHETHER THE LOAN TAKEN FROM PARTN ERS CAPITAL IS UTILIZED FOR THE PURPOSE OF PURCHASE OF PROPERTY OR NOT. ACCORDI NGLY, I SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER TO RE-DECIDE AFTER EXAMINING THE SAME AND NEEDLESS TO SAY THAT AFTER PROVIDING REASONABLE OPP ORTUNITY OF BEING HEARD TO ASSESSEE. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 07/09/2010 SD/- (MAHAVIR SINGH) (JUDICIAL MEMBER) AHMEDABAD, DATED : 07/09/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-XV, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD