P.Mylainathan, CHENNAI V. ITO, CHENNAI

ITA 1228/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7851 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: MRS J SREE VIDYA
• Section: 143(3); 148; 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' # . $ , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICI AL MEMBER ./ I.T.A.NOS.1227& 1228/MDS/2016 ( / ASSESSMENT YEARS: 2007-08 & 2008-09) MR.P.MYLAINATHAN, 133/295, WALLTAX ROAD, PARK TOWN, CHENNAI-600 003. VS THE INCOME TAX OFFICER, NON-CORPORATE WARD-5(3) CHENNAI-600 006. PAN: AKQPM2425F ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MRS. J.SREE VIDYA, ADVOCATE /RESPONDENT BY : MR. SUPRIYO PAL, JCIT /DATE OF HEARING : 24 TH OCTOBER, 2016 /DATE OF PRONOUNCEMENT : 15 TH DECEMBER, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGGRIE VED BY THE SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI BOTH DATED 07.03. 2016 IN ITA NO.172 & 171/CIT(A)-5/13-14 PASSED UNDER SECTIO N 143(3) R.W.S. 147 & 250(6) OF THE ACT FOR THE ASSES SMENT YEARS 2007-08 & 2008-09 RESPECTIVELY. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN BOTH THESE APPEALS, HOWEVER, THE CRUX OF THE ISSUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LEARNED ASSESSI NG 2 ITA NOS.1227 & 1228/MDS/2016 OFFICER FOR ` 54,562/- & ` 1,20,374/- FOR THE ASSESSMENT YEARS 2007-08 & 2008-09 RESPECTIVELY TOWARDS DISALLOWANCE OF INTEREST AGAINST LOAN OBTAINED FROM STANDARD CHARTE RED BANK IN ORDER TO TAKE OVER THE EXISTING LOAN FROM LIC HO USING FINANCE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF SERVICING AND MAINTENANCE OF MACHINES USED FOR SOFT DRINKS, FILED HIS RETURNS OF INCOME FOR THESE ASSESSMENT YEARS 2007-0 8 & 2008-09 CLAIMING DEDUCTION OF INTEREST PAID ON HOUS ING LOAN UNDER SECTION 24 OF THE ACT. SUBSEQUENTLY, THE LEAR NED ASSESSING OFFICER REOPENED THE ASSESSMENTS FOR THE RELEVANT ASSESSMENT YEARS ON 27.03.2012 BY ISSUANCE OF NOTIC E UNDER SECTION 148 OF THE ACT IN ORDER TO WITHDRAW THE DED UCTION OF INTEREST CLAIMED ON HOUSING LOAN UNDER SECTION 24 O F THE ACT. THE LEARNED ASSESSING OFFICER HAD ARRIVED AT SUCH C ONCLUSION BECAUSE THE LOAN WAS OBTAINED FOR THE PURPOSE OF PU RCHASING A COMMERCIAL PROPERTY BY THE ASSESSEE, SHRI P.YUVAR AJ (ASSESSEES FATHER) SHRI P.SINGARAVELU, SHRI P.ELAN GOVAN AND 3 ITA NOS.1227 & 1228/MDS/2016 SMT. P.KALAIVANI AND THE LOAN WAS RECEIVED BY CHEQU E DRAWN IN THE NAME OF THE ASSESSEES FATHER SHRI P.YUVARA J. ACCORDINGLY, THE LEARNED ASSESSING OFFICER DISALLOW ED THE CLAIM OF DEDUCTION UNDER SECTION 24 OF THE ACT BEIN G THE INTEREST PAID TO STANDARD CHARTERED BANK. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) ENDORSED THE VIEW OF THE LEARNED ASSESSIN G OFFICER AND DISMISSED THE APPEALS OF THE ASSESSEE. 5. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THOUGH THE ASSESSEE HAD JOINTLY OBTA INED THE LOAN, HE HAD PAID THE INTEREST FROM HIS INCOME AND THEREFORE HE WAS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SEC TION 24 OF THE ACT. HE FURTHER ARGUED STATING THAT THE APPEALS OF THE ASSESSEE MAY BE REMITTED BACK TO THE FILE OF THE LE ARNED ASSESSING OFFICER TO VERIFY WHETHER THE ASSESSEE HA D REPAID THE LOAN ALONG WITH INTEREST. 4 ITA NOS.1227 & 1228/MDS/2016 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE MAGNANIMOUSLY AGREED FOR THE REQUEST OF THE ASSESSE E. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS ON RECORD. THE CLAIM OF THE A SSESSEE IS THAT, THOUGH THE LOAN WAS TAKEN JOINTLY BY HIM ALON G WITH HIS FATHER AND OTHERS, IT WAS HE WHO HAD REPAID THE LOA N ALONG WITH THE INTEREST IN PROPORTIONATE TO HIS SHARE OF RENTAL INCOME. IT WAS THEREFORE PLEADED THAT THE INTEREST PAID BY HIM MAY BE ALLOWED AS DEDUCTION UNDER SECTION 24 OF THE ACT. WE FIND MERIT IN THE CONTENTION OF THE LEARNED AUTHORI ZED REPRESENTATIVE. THOUGH THE LOAN IS OBTAINED JOINTLY BY THE ASSESSEE AND DEPLOYED FOR THE PURPOSE OF TAKING OVE R AN EXISTING HOUSING LOAN AND IF THE ASSESSEE HAS REPAI D THE LOAN ALONG WITH INTEREST IN PROPORTION TO HIS SHARE IN T HE PROPERTY, THEN OBVIOUSLY HE WILL BE ENTITLED FOR THE DEDUCTIO N UNDER SECTION 24 OF THE ACT SUBJECT TO COMPLIANCE OF THE 2 ND AND 3 RD PROVISO TO SECTION 24(B) OF THE ACT AND EXPLANATION S PROVIDED THERE UNDER. THE RELEVANT PORTION OF SECTION 24 OF THE ACT IS REPRODUCED HEREIN BELOW FOR REFERENCE:- 5 ITA NOS.1227 & 1228/MDS/2016 24. INCOME CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY SHALL BE COMPUTED AFTER MAKING THE FOLLOW ING DEDUCTIONS, NAMELY:- (A).. (B) WHERE THE PROPERTY HAS BEEN ACQUIRED, CONSTRUCT ED, REPAIRED, RENEWED OR RECONSTRUCTED WITH BORROWED CAPITAL, TH E AMOUNT OF ANY INTEREST PAYABLE ON SUCH CAPITAL. PROVIDED .. PROVIDED FURTHER THAT WHERE THE PROPERTY REFERRED T O IN THE FIRST PROVISO IS ACQUIRED OR CONSTRUCTED WITH CAPITAL BOR ROWED ON OR AFTER 1 ST DAY OF APRIL, 1999 AND SUCH ACQUISITION OR CONSTRU CTION IS COMPLETED WITHIN THREE YEARS FROM THE END OF THE FI NANCIAL YEAR IN WHICH CAPITAL WAS BORROWED, THE AMOUNT OF DEDUCTION UNDER THE CLAUSE SHALL NOT EXCEED TWO LAKH RUPEES. EXPLANATION:- WHERE THE PROPERTY HAS BEEN ACQUIRED OR CONSTRUCTED WITH BORROWED CAPITAL, THE INTEREST, IF ANY PAYABLE ON SUCH CAPITAL BORROWED FOR THE PERIOD PRIOR TO THE P REVIOUS YEAR IN WHICH THE PROPERTY HAS BEEN ACQUIRED OR CONSTRUCTED AS REDUCED BY ANY PART THEREOF ALLOWED AS DEDUCTION UNDER ANY OTHER PROVISION OF THIS ACT SHALL BE DEDUCTED UNDER THIS CLAUSE IN EQUAL INSTALMENTS FOR THE SAID PREVIOUS YEAR AND FOR EACH OF THE FOUR IMMEDIATELY SUCCEEDING PREVIOUS YEARS. PROVIDED ALSO THAT NO DEDUCTION SHALL BE MADE UNDER THE SECOND PROVISO UNLESS THE ASSESSEE FURNISHES A CERTIFICATE FROM THE PERSON TO WHOM ANY INTEREST IS PAYABLE ON THE CAPIT AL BORROWED SPECIFYING THE AMOUNT OF INTEREST PAYABLE BY THE AS SESSEE FOR THE PURPOSE OF SUCH ACQUISITION OR CONSTRUCTION OF THE PROPERTY OR CONVERSION OF THE WHOLE OR ANY PART OF THE CAPITAL BORROWED WHICH REMAINS TO BE REPAID AS A NEW LOAN. EXPLANATION:- FOR THE PURPOSES OF THIS PROVISO, THE EXPRESSION, NEW LOAN MEANS THE WHOLE OR ANY PART OF A LOAN TA KEN BY THE ASSESSEE SUBSEQUENT TO THE CAPITAL BORROWED FOR THE PURPOSE OF REPAYMENT OF SUCH CAPITAL. 8. SINCE THE LEARNED ASSESSING OFFICER HAS NOT VERI FIED WHETHER THE ASSESSEE HAD COMPLIED WITH THE SECOND PROVISO 6 ITA NOS.1227 & 1228/MDS/2016 OF SECTION 24 AND REPAID THE LOAN ALONG WITH INTERE ST IN PROPORTIONATE TO HIS SHARE AND OBTAINED A CERTIFICA TE FROM THE FATHER OF THE ASSESSEE AND THE BANK FOR HAVING PAI D THE INTEREST TO THE BANK IN ACCORDANCE WITH THE THIRD PROVISO OF SECTION 24, WE HEREBY REMIT THE MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR VERIFYING THE SAME AN D PASS APPROPRIATE ORDER IN THE LIGHT OF OUR ABOVE MENTION ED OBSERVATIONS. IT IS ORDERED ACCORDINGLY. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES AS MENTIONED HEREI N ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 15 TH DECEMBER , 2016 SD/- SD/- ( ' # . $ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 15 TH DECEMBER, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF