MR.DINESH RAMESHWARDUTT SHARMA, Mumbai V. PR.CIT-28, Mumbai

ITA 1208/MUM/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6293 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 05-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJUNATH SWAMI
• Keywords: Opportunity of being heard; Cost of acquisition; Set aside
• Section: 143(1); 263; 139

Judgement Text

P A G E | 1 ITA NO.1208/MUM/2019 AY. 2014 - 15 DINESH RAMESHWARDUTT SHARMA VS. PR. CIT - 28 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 1208/MUM/2019 (ASSESSMENT YEAR: 2014 - 15 ) DINESH RAMESHWARDUTT SHARMA C - 2 - 4 - 3 - 3, SECTOR 16, VASHI, NAVI MUMBAI, 400703 VS. PR. CIT - 38 MUMBAI PAN AMRPS1609L (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI MANJUNATH SWAMI , CIT D.R DATE OF HEARING: 17.07 .2019 DATE OF PRONOUNCEMENT: 2 6 .07.2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX - 28, MUMBAI, (FOR SHORT PR. CIT) UNDER SEC.263 OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT) , DATED 16.03.2018 FOR A.Y. 2014 - 15. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS OF APPEAL BEFORE US : THE LD. CIT ERRED IN PASSING AN ORDER U/S 263 AND THEREBY SETTING ASIDE THE ASSESSMENT ORDER ON ISSUE THAT HAD BEEN ADJUDICATED BY THE ASSESSING OFFICER AFTER DUE VERIFICATION OF THE DETAILS GIVEN DURING THE COURSE OF THE ASSESSMENT. P A G E | 2 ITA NO.1208/MUM/2019 AY. 2014 - 15 DINESH RAMESHWARDUTT SHARMA VS. PR. CIT - 28 2. BRIEFLY STATED, THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR A.Y 2014 - 15 ON 14. 11.2014, DECLARING HIS TOTAL INCOME AT RS.82,430/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER SEC.143(2). THE A.O AFTER NE CESSARY DELIBERATIONS, VIDE HIS ORDER PASSED UNDER SEC. 143(3), DATED 10.03.2016 ACCEPTED THE RETURNED INCOME OF THE AS SESSEE . 3. SUBSEQUENTLY, THE PR. CIT IN EXERCISE OF THE POWER S VESTED WITH HIM UNDER SEC.263 CALLED FOR THE RECORDS OF THE ASSESSEE. ON A PERUSAL OF THE RECORDS THE PR.CIT HELD A CONVICTION THAT THE ORDER PASSED BY THE A.O UNDER SEC.143(3), DATED 10.03.2016 WAS ERRONEOUS , IN SO FAR IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE , ON TWO GROUNDS VIZ. (I ) THAT, THE A.O HAD WRONGLY ALLOWED THE ASSES S ES CLAIM FOR DEDUCTION OF INTEREST PAID ON HOUSING LOAN OF RS.29,45,721/ - AGAINST THE CAPITAL GAIN ON SALE OF RESIDENTIAL PROPERTY; AND (II) THAT, THE A.O HAD WRONGLY ALLOWED THE CARRY FORWARD OF LONG TERM CAPITAL LOSS OF RS.21,30,756/ - . IN THE BACKDROP OF HIS AFORESAID CONVICTION THE PR. CIT CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE ORDER PASSED BY THE A.O UNDER SEC. 143(3), DATED 10.03.2016 MAY NOT BE REVISED UNDER SEC. 263 OF THE ACT. AS THE REPL Y FILED BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE PR. CIT, THEREFORE, HE SET ASIDE THE ASSESSMENT ORDER PASSED BY THE A.O UNDER SEC. 143(3), DATED 10.03.2016 TO HIS FILE WITH TWO FOLD DIRECTIONS VIZ. (I). TO DISALLOW THE CLAIM OF THE ASSESSEE TOWARDS DE DUCTION OF INTEREST OF RS.29,45,721/ - ON HOUSING LOAN AGAINST THE AMOUNT OF CAPITAL GAIN ; AND (II). TO DISALLOW THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF LONG TERM CAPITAL LOSS OF RS.21,30,756/ - AFTER CONDUCTING PROPER INQUIRIES. ACCORDINGLY, THE PR .CIT DIRECTED THE A.O TO PASS A FRESH ASSESSMENT ORDER AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. P A G E | 3 ITA NO.1208/MUM/2019 AY. 2014 - 15 DINESH RAMESHWARDUTT SHARMA VS. PR. CIT - 28 4. AGGRIEVED, THE ASSESSEE HAS ASSAILED THE ORDER PASSED BY THE PR. CIT UNDER SEC. 263 IN APPEAL BEFORE US. AS THE ASSESSEE APPELLANT HAD FAILED TO PUT UP AN APPEARANCE AT THE TIME OF HEARING OF THE APPEAL, THEREFORE, WE ARE CONSTRAINED TO DISPOSE OFF THE APPEAL AS PER RULE 24 OF THE APPELLATE TRIBUNAL RULES, 1963 AFTER HEARING THE RESPONDENT REVENUE AND PERUSING THE ORDERS OF THE LOWER AUT HORITIES. THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) SUBMITTED , THAT AS THE ORDER PASSED BY THE A.O UNDER SEC. 143(3), DATED 10.06.2016 WAS PATENTLY ERRONEOUS INSOFAR IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE, THEREFORE, THE PR. CIT HAD RIGHTLY EXERCISED HIS REVISIONAL JURISDICTION UNDER SEC. 263 AND SET ASID E THE ORDER FOR DENOVO ADJUDICATION TO THE FILE OF THE A.O. THE LD. A.R TOOK US THROUGH THE FACTS OF THE CASE AND SUBMITTED THAT THE CLAIM OF THE ASSESSEE THAT THE INTEREST THAT WAS PAID BY HIM ON THE HOUSING LOAN BE TREATED AS A PART OF THE COST OF ACQU ISITION OF THE RESIDENTIAL PROPERTY WHILE COMPUTING THE CAPITAL GAIN ON SALE OF THE SA ID PROPERTY CLEARLY MILITATED AGAINST THE MANDATE OF LAW. FURTHER, IT WAS SUBMITTED BY THE LD. D.R , THAT AS THE RETURN OF INCOME FILED BY THE ASSESSEE ON 14.11.2014 WA S A BELATED RETURN, THEREFORE, THE CLAIM OF CARRY FORWARD OF THE LONG TERM CAPITAL LOSS OF RS.21,30,756/ - RAISED BY HIM WAS RIGHTLY DIRECTED BY THE PR. CIT TO BE DISALLOWED. IN SUM AND SUBSTANCE, IT WAS SUBMITTED BY THE LD. D.R THAT AS THE ORDER PASSED B Y THE A.O WAS ERRONEOUS INSOFAR IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE, THEREFORE, THE PR.CIT HAD RIGHTLY INVOKED HIS REVISIONAL JURISDICTION UNDER SEC.263 , AND SET ASIDE THE MATTER TO THE FILE OF THE A.O FOR FRESH ADJUDICATION. THE LD. D.R IN ORDER TO SUPPORT THE EXERCISE OF THE REVISIONAL JURISDICTION BY THE PR. CIT RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL COMPANY LTD. VS. CIT (2008) 243 ITR 83 (SC) , AND THE ORDER OF THE ITAT H BENCH , P A G E | 4 ITA NO.1208/MUM/2019 AY. 2014 - 15 DINESH RAMESHWARDUTT SHARMA VS. PR. CIT - 28 MUMBAI IN HORIZON INVESTMENT COMPANY LTD. VS. ACIT - 6, MUMBAI (ITA NO.1593/M/2013), DATED 27.06.2014 . 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE JUDICIAL PRONOUNCEMENT S RELIED UPON BY HIM IN THE COURSE OF HEARING OF THE APPEAL . AS OBSERVED BY US HEREINABOVE, THE PR.CIT HAD EXERCISED HIS REVISIONAL JURISDICTION UNDER SEC. 263 ON TWOFOLD ISSUES VIZ. (I) THAT, THE A.O HAD ERRONEOUSLY ALLOWED THE CLAIM OF DEDUCTION OF HOUSING LOAN INTEREST OF RS.29,45,721/ - FO R THE PURPOSE OF COMPUTING THE CAPITAL GAIN ON SALE OF RESIDENTIAL PROPERTY BY THE ASSESSEE; AND (II) THAT, THE A.O HAD ERRONEOUSLY ALLOWED THE CLAIM OF THE ASSESSEE FOR CARRY FORWARD OF LONG TERM CAPITAL LOSS OF RS.21,30,756/ - . 6. WE SHALL FIRST ADVE RT TO THE CLAIM RAISED BY THE ASSESSEE WHEREIN HE HAD SOUGHT DEDUCTION O F INTEREST ON HOUSING LOAN OF RS.29,45,721/ - WHILE COMPUTING THE CAPITAL GAIN ON SALE OF THE RESIDENTIAL PROPERTY. AS IS DISCERNIBLE FROM THE RECORDS, THE ASSESSEE HAD PURCHASED A RESI DENTIAL PROPERTY ON 04.12.2006, VIDE AN AGREEMENT THAT WAS REGISTERED ON 07.12.2006. FOR PURCHASE OF THE AFORESAID PROPERTY THE ASSESSEE HAD AVAILED A HOUSING LOAN FROM ICIC I BANK OF RS.36,88,582/ - . AT THE TIME OF SALE OF THE AFORESAID RESIDENTIAL PROPERTY THE ASSESSEE HAD CLAIMED THE INTEREST PAID ON THE HOUSING LOAN THAT WAS SPREAD OVER THE PERIOD I.E F INANCIAL YEAR 2006 - 07 TO 2013 - 14 AGGREGATING TO RS.29,45,721/ - AS AN EXPENSE INCURRED IN RELATION TO PURCHASE OF THE SAID PROPERTY. IT WAS THE CLAIM OF THE ASSESSEE THAT AS HE BEING A NON - RESIDENT INDIAN HAD NO TAXABLE INCOME IN INDIA DURING THE PERIOD RELEVANT TO A.Y 2008 - 09 TO A.Y 2014 - 15, THEREFORE, HE HAD NOT TAKEN ANY BENEFIT IN RESPECT OF THE INTEREST ON HOUSING LOAN IN RESPECT OF THE AFORESAID SELF - OCCUPIED PROPERTY DURING ANY OF THE PREVIOUS YEARS PERTAINING TO A.Y 2010 - 11 TO P A G E | 5 ITA NO.1208/MUM/2019 AY. 2014 - 15 DINESH RAMESHWARDUTT SHARMA VS. PR. CIT - 28 A.Y 2013 - 14. IN THE BACKDROP OF THE AFORESAID FACTS, DEDUCTION OF THE INTEREST PAID ON THE HOUSING LOAN DURING THE FINANCIAL YEARS: 2006 - 07 TO 2013 - 14 WAS CLAIMED BY THE ASSESSEE AS A PART OF THE EXPENSE INCURRED ON PURCHASE O F THE ABOVE MENTIONED PROPERTY WHILE COMPUTING THE CAPITAL GAIN ON THE SALE OF THE SAME DURING THE YEAR UNDER CONSIDERATION. IN SUM AND SUBSTANCE, THE ASSESSEE HAD INCLUDED INTEREST PAID ON THE HOUSING LOAN RAISED FOR PURCHASE OF RESIDENTIAL PROPERTY AS A PART OF THE COST OF ACQUISITION OF THE RESIDENTIAL PROPERTY WHILE COMPUTING THE CAPITAL GAIN ON THE SALE OF THE SA ME. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE AFORESAID ISSUE AND ARE UNABLE TO ACCEPT THE AFORESAID CLAIM OF THE ASSESSEE. AS PER SEC. 24(B) OF THE ACT, ANY INTEREST PAID FOR ACQUIRING, CONSTRUCTING, REPAIRING , RENEWING OR RECONSTRUCTI ON OF A HOUSE PROPERTY BY UTILISING BORROWED CAPITAL IS ALLOWABLE AS A DEDUCTION UNDER THE SAID STATUTORY PROVISION. T HERE IS NOTHING PROVIDED IN THE STAT UTE WHICH ALLOWS CAPITALI Z ING OF THE AFORESAID INTEREST EXPENDITURE AND ALLOWING THE TREATING OF THE SAME AS A PART OF THE COST OF ACQUISITION OF THE PROPERTY AT THE TIME OF COMPUTING THE CAPITAL GAIN ON THE SALE OF THE SAME. WE THUS FINDING OURSEL VES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE PR. CIT THAT THE A.O HAD ERRONEOUSLY CONCURRED WITH THE ASSESSEE , AND HAD WRONGLY ALLOWED HIS CLAIM FOR DEDUCTION OF INTEREST ON HOUSING LOAN BY TREATING THE SAME AS A PART OF THE COST OF ACQUISITION OF THE RESIDENTIAL PROPERTY UNDER CONSIDERATION, THEREFORE, UPHOLD HIS ORDER TO THE SAID EXTENT . 7 . NOW , WE SHALL ADVERT TO THE OBSERVATION OF THE PR. CIT THAT THE A.O HAD ERRONEOUSLY ALLOWED THE CLAIM OF THE ASSESSE E FOR CARRY FORWARD OF THE LONG TERM CAPITAL LOSS OF RS. 21,30,756/ - , DESPITE THE FACT THAT THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION VIZ. A.Y. 2014 - 15 AFTER THE DUE DATE PRESCRIBED IN SUB - SECTION (1) OF SEC. 139 OF TH E ACT. AS IS DISCERNIBLE FROM THE ORDER OF P A G E | 6 ITA NO.1208/MUM/2019 AY. 2014 - 15 DINESH RAMESHWARDUTT SHARMA VS. PR. CIT - 28 THE PR. CIT, THE ASSESSEE WHO HAD FILED HIS RETURN OF INCOME FOR A.Y 2014 - 15 ON 14.11.2014 I.E BEYOND THE STIPULATED TIME PERIOD ENVISAGED IN SUB - SECTION (1) OF SEC.139, HAD HOWEVER , CLAIMED THE CARRY FORWARD OF LONG TERM CAPITAL LOSS OF RS.21,30,756/ - . T HE PR. CIT WAS OF THE VIEW THAT AS THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS BEYOND THE PRESCRIBED TIME LIMIT, THEREFORE, THE ASSESSEE WAS NOT ENTITLED FOR CARRY FORWARD OF T HE LONG TERM CAPITAL LOSS OF RS.21,30,756/ - , AS WAS CLAIMED BY HIM IN HIS RETURN OF INCOME. WE FIND THAT THE AFORESAID OBSERVATION OF THE PR. CIT IS IN ABSOLUTE CONFORMITY WITH THE MANDATE OF LAW A S IS ENVISAGED IN SEC TION 80 R.W SUB - SECTION (1) OF SEC.139. AS PER SEC TION 80 R.W. SUB - SECTION (3) OF SEC TION 139 , AN ASSESSEE WHO SEEK S TO CARRY FORWARD THE LONG TERM CAPITAL LOSS UNDER SUB - SECTION (1) OF SEC TION 74 OF THE ACT, IS STATUTORILY REQUIRED TO FILE HIS RETURN OF INCOME WITH IN THE STIPULATED TIME PERIOD PRESCRIBED UNDER SUB - SECTION (1) OF SEC TION 139 . IN SUM AND SUBSTANCE, A LONG TERM CAPITAL LOSS SUFFERED BY AN ASSESSEE DURING A YEAR CAN BE ALLOWED TO BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR AND SO ON FOR A PERIOD NOT EXCEEDING 8 ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FOR WHICH THE LOSS WAS FIRST COMPUTED, SUBJECT TO THE CONDITION THAT THE RETURN OF INCOME FOR THE YEAR IN WHICH SUCH LOSS HAD BEEN COMPUTED WAS FILED BY THE DUE DATE AS ENVISAGE D IN ITS CASE UNDER SUB - SECTION (1) OF SEC TION 139 . AS PER THE FACTS DISCERNIBLE FROM THE ORDER OF THE PR. CIT, AS THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION I.E A.Y 2014 - 15 WITHIN THE DUE DATE CONTEMPLATED UNDER SUB - SECTION (1) OF SEC.139 I.E LATEST BY 31.07.2014, THEREFORE, HE WAS NOT ENTITLED TO CARRY FORWARD THE LONG TERM CAPITAL LOSS OF RS.21,30,756/ - AS WAS CLAIMED BY HIM IN HIS RETURN OF INCOME. ACCORDINGLY, FINDING NO INFIRMITY IN THE VIEW TAKEN BY THE PR. C IT, WHEREIN HE HAD DIRECTED THE A.O TO DISALLOW THE ASSESSES CLAIM FOR P A G E | 7 ITA NO.1208/MUM/2019 AY. 2014 - 15 DINESH RAMESHWARDUTT SHARMA VS. PR. CIT - 28 CARRY FORWARD OF THE AFORESAID LONG TERM CAPITAL LOSS OF RS.21,30,756/ - , AFTER CONDUCTING PROPER ENQUIRIES, WE UPHOLD THE SAME TO THE SAID EXTENT. RESULTANTLY, THE GROUND OF APPEAL NO . 1 RAISED BY THE ASSESSEE IS DISMISSED. 8 . THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN COURT ON 2 6 .07.2019 S D / - S D / - ( N.K. PRADHAN) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 26 .07.2019 *** P.S ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 8 ITA NO.1208/MUM/2019 AY. 2014 - 15 DINESH RAMESHWARDUTT SHARMA VS. PR. CIT - 28