K.S.Kamalakannan, CHENNAI V. ACIT, CHENNAI

ITA 1243/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8139 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-01-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 06-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAHADEVAN
• Assessee Lawyers: A S SRIRAMAN
• Section: 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1243/MDS/2016 ' (' / ASSESSMENT YEAR : 2003-04 SHRI K.S. KAMALAKANNAN, C/O SHRI S. SRIDHAR, ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5, 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI - 600 020. PAN : AACPK 5960 F V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(4), CHENNAI. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SH. A.S. SRIRAMAN, ADVOCATE ,-*+ . / / RESPONDENT BY : SHRI B. SAHADEVAN, JCIT 0 . 1$ / DATE OF HEARING : 02.01.2017 2!( . 1$ / DATE OF PRONOUNCEMENT : 05.01.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -8, CHENNA I, DATED 29.02.2016 AND PERTAINS TO ASSESSMENT YEAR 2003-04. 2 I.T.A. NO.1243/MDS/16 2. SH. A.S. SRIRAMAN, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE ASSESSING OFFICER, IN THE GUISE OF RECTIFYING AN ERROR UNDER SECTION 154 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'), DISALLOWED THE INTEREST ON BORROWED CAPITAL. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT LOAN TA KEN FROM HSBC WAS USED FOR REPAYMENT OF LOAN TO M/S EGMORE BENEFI T SOCIETY LTD. AND TO ING VYSYA BANK. THE ASSESSING OFFICER FOUND THAT WHILE COMPUTING INCOME UNDER SECTION 24 OF THE ACT UNDER INCOME FROM PROPERTY, THE INTEREST CANNOT BE ALLOWED. ON APPE AL BY THE ASSESSEE, THE CIT(APPEALS) BY PLACING RELIANCE ON T HE ASSESSEE'S OWN CASE, FOR THE ASSESSMENT YEAR 2001-02, HAS CONF IRMED THE ORDER OF THE ASSESSING OFFICER. ACCORDING TO THE L D. COUNSEL, WHETHER THE INTEREST PAID BY THE ASSESSEE TO BANK I S ALLOWABLE UNDER SECTION 24(VI) OF THE ACT OR NOT IS A DEBATAB LE ISSUE. WHILE PASSING THE IMPUGNED ORDER DATED 10.11.2006, THE TR IBUNAL ORDER WAS NOT AVAILABLE FOR THE ASSESSING OFFICER. THE T RIBUNAL BY AN ORDER DATED 27.11.2009, IN THE ASSESSEE'S OWN CASE, FOUND THAT THE INTEREST CANNOT BE ALLOWED FOR THE ASSESSMENT YEAR 2001-02. IN THE ABSENCE OF THIS ORDER OF THIS TRIBUNAL, ACCORDING T O THE LD. COUNSEL, THE ASSESSING OFFICER CANNOT MAKE ANY DISALLOWANCE IN THE GUISE OF RECTIFYING A PRIMA FACIE ERROR. WHETHER DEDUCTION ON INTEREST PAID BY 3 I.T.A. NO.1243/MDS/16 THE ASSESSEE ON THE BORROWED LOAN IS ALLOWABLE WHIL E COMPUTING INCOME FROM HOUSE PROPERTY OR NOT IS A DEBATABLE IS SUE AND REQUIRES A DETAILED ENQUIRY. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFI RMING THE ORDER OF THE ASSESSING OFFICER. 3. ON THE CONTRARY, SHRI B. SAHADEVAN, THE LD. DEPA RTMENTAL REPRESENTATIVE, SUBMITTED THAT THIS TRIBUNAL FOR TH E ASSESSMENT YEAR 2001-02 IN THE ASSESSEE'S OWN CASE, EXAMINED T HE ISSUE ELABORATELY AND FOUND THAT THE INTEREST PAID BY THE ASSESSEE ON THE BORROWED LOAN, WHICH WAS USED FOR REPAYMENT OF LOAN BORROWED BY THE ASSESSEES FATHER, IS NOT AN ALLOWABLE DEDUCTIO N. ACCORDING TO THE LD. D.R., EVEN THOUGH THE ORDER OF THIS TRIBUNA L WAS NOT AVAILABLE ON RECORD, THE ASSESSING OFFICER BY APPLY ING SECTION 24(VI) OF THE ACT, HAS RECTIFIED THE ERROR WHICH IS APPARE NT ON RECORD. ACCORDING TO THE LD. D.R., THE INTEREST PAID ON THE BORROWED LOAN USED FOR REPAYING THE LOAN BORROWED BY THE ASSESSEE S FATHER, CANNOT BE ALLOWED WHILE COMPUTING THE INCOME FROM H OUSE PROPERTY, THEREFORE, THE CIT(APPEALS) HAS RIGHTLY CONFIRMED T HE ORDER OF THE ASSESSING OFFICER. 4 I.T.A. NO.1243/MDS/16 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSING OFFICER, IN EXERCISE OF HER POWER UNDER S ECTION 154 OF THE ACT, FOUND THAT BY WAY OF FAMILY ARRANGEMENT ON 17. 07.1995, THE PROPERTY WAS ALLOTTED TO THE ASSESSEE. THE LOAN BO RROWED FROM HSBC WAS SAID TO BE USED FOR REPAYMENT OF LOAN TO M /S EGMORE BENEFIT SOCIETY LTD. THE ASSESSING OFFICER HAS ALS O FOUND THAT THE LOAN TAKEN FROM M/S EGMORE BENEFIT SOCIETY LTD. WAS TAKEN BY THE ASSESSEES FATHER. THEREFORE, ACCORDINGLY, THE ASS ESSING OFFICER FOUND THAT THE INTEREST PAID BY THE ASSESSEE ON THE BORROWED LOAN, WHICH WAS USED FOR REPAYING THE LOAN TAKEN BY HIS F ATHER FROM M/S EGMORE BENEFIT SOCIETY LTD., IS NOT AN ALLOWABLE DE DUCTION WHILE COMPUTING INCOME FROM HOUSE PROPERTY. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER THE ASSESSING OFFICER CAN DISALLOW THE CLAIM OF THE ASSESSEE WITH REGARD TO PAYMENT OF INT EREST WHILE PASSING AN ORDER UNDER SECTION 154 OF THE ACT? 5. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SECTION 154 OF THE ACT. SECTION 154 OF THE ACT ENABLES THE ASSESSING OFFICER TO RECTIFY AN ERROR WHICH IS APPARENT ON TH E FACE OF THE RECORD. IN THE CASE BEFORE US, WHETHER THE INTERES T ON THE BORROWED 5 I.T.A. NO.1243/MDS/16 LOAN, WHICH WAS UTILISED FOR REPAYING THE LOAN TAKE N BY THE ASSESSEES FATHER FOR PURCHASING THE PROPERTY, IS A N ALLOWABLE DEDUCTION OR NOT WHILE COMPUTING INCOME FROM HOUSE PROPERTY, IS DEFINITELY A DEBATABLE ISSUE. THIS CANNOT BE DECI DED WHILE RECTIFYING THE ERROR WHICH IS SAID TO BE ON THE FAC E OF THE RECORD. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ALLOWANCE OR DISALLOWANCE OF THE INTEREST ON THE BORROWED LOAN C ANNOT BE CONSIDERED TO BE A PRIMA FACIE ERROR, ESPECIALLY, WHEN THE ASSESSEE CLAIMS THE SAME FOR REPAYING HOUSING LOAN TAKEN BY HIS FATHER. 6. THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2001-02, EXAMINED THIS ISSUE BY AN ORDER DATED 27.11.2009 AND FOUND THAT THE INTEREST ON BORROWED LOAN, WHICH WAS USED FOR REPAYMENT OF EARLIER LOAN TAKEN FOR ACQUISITION, RE CONSTRUCTION, REPAIR, ETC. ON THE PROPERTY CANNOT BE ALLOWED WHIL E COMPUTING INCOME FROM HOUSE PROPERTY. THIS ORDER OF THE TRIB UNAL WAS PRONOUNCED ON 27.11.2009. AS RIGHTLY POINTED OUT B Y THE LD.COUNSEL FOR THE ASSESSEE, THIS ORDER WAS NOT AVA ILABLE FOR THE ASSESSING OFFICER ON 10.11.2006 WHEN SHE PASSED THE IMPUGNED ORDER OF RECTIFICATION. THEREFORE, THIS TRIBUNAL I S OF THE CONSIDERED OPINION THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER CANNOT 6 I.T.A. NO.1243/MDS/16 BE AMENABLE FOR RECTIFICATION UNDER SECTION 154 OF THE ACT. THEREFORE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE OR DERS OF THE LOWER AUTHORITIES AND THE SAME ARE SET ASIDE. THE ASSESS ING OFFICER IS DIRECTED TO DELETE THE DISALLOWANCE OF INTEREST ON THE BORROWED CAPITAL. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 5 TH JANUARY, 2017 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 5 TH JANUARY, 2017. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-8, CHENNAI 4. PRINCIPAL CIT, CHENNAI-4, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.