Suganraj Sunil Kumar, CHENNAI V. ITO Non Corporate Ward 12(4), CHENNAI

ITA 1502/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0649 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 03-05-2018
• Court: TRIBUNAL

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL D SMC BENCH : CHENNAI , !' !. % % , & ' BEFORE SHRI JOGINDER SINGH, VICE PRESIDENT & SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1502/CHNY/2018 / ASSESSMENT YEAR : 2013-14 SHRI SUGANRAJ SUNIL KUMAR , 136,GOVINDAPPA STREET, CHENNAI 600 001. VS. THE INCOME TAX OFFICER, NON-CORPORATE WARD-12(4), CHENNAI 600 006. [PAN AJUPS 8173 R] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : MR.G.BASKAR,ADVOCATE /RESPONDENT BY : MR.B.SAGADEVAN,JCIT,D.R / DATE OF HEARING : 04 - 12 - 20 1 8 / DATE OF PRONOUNCEMENT : 04 - 12 - 201 8 , / O R D E R PER JOGINDER SINGH, VICE PRESIDENT: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-13, C HENNAI DATED 22.02.2018 FOR THE ASSESSMENT YEAR 2013-14 ON THE G ROUND THAT THE LD. FIRST APPELLATE AUTHORITY ERRED IN CONFIRMING T HE DISALLOWANCE OF ` .10,86,733/- (WHICH IS 1/3 RD OF INTEREST OF ` .32,60,199/-) PAID ON ITA NO.1502/CHNY/2018 :- 2 -: BORROWED CAPITAL WITHOUT CONSIDERING THE FACTUAL MA TRIX AS THE INTEREST EXPENSES IS ALLOWABLE AS COST OF ACQUISITION AS THE SAME WERE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF THE PROPERTY AND THUS FALLS UNDER THE PURVIEW SEC.48 OF THE INCOME T AX ACT, 1961. 2. DURING HEARING THE LD. COUNSEL FOR THE ASSESSEE SHRI G.BASKAR ADVANCED ARGUMENT, WHICH IS IDENTICAL TO THE GROUNDS RAISED, BY PLACING RELIANCE UPON THE DECISION FROM HONBLE JURISDICTIIONAL HIGH COURT IN CIT VS. K.RAJA GOPAL RAO ( 2001) 252 ITR 459 (MAD.). ON THE OTHER HAND, LD.D.R B.SAGADEVAN D EFENDED THE ADDITION MADE BY THE LD. ASSESSING OFFICER AND CONF IRMED BY THE LD.CIT(A). IT WAS CONTENDED THAT THE LOAN WAS NOT U SED FOR ACQUISITION OF THE PROPERTY, THEREFORE, IT NEEDS EXAMINATION. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF A RE THAT THE ASSESSEE DECLARED TOTAL INCOME OF ` .11,44,160/- AND FILED HIS RETURN OF INCOME ON 15.11.2013, WHICH WAS PROCESSED U/S.143(1) OF TH E ACT. THEREAFTER, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICES U/S.143(2) & 142(1) OF THE ACT WERE SERVED UPON THE ASSESSEE. THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS ON VARIOUS DATES AND FURNISHED THE DETAILS CALLED FOR BY THE LD. ASS ESSING OFFICER (AS IS EVIDENT FROM PARAS 1 & 2 OF THE ASSESSMENT ORDER). THE ASSESSEE ALONG WITH OTHER TWO PERSONS NAMELY SHRI S.RAJESH K UMAR & SHRI ITA NO.1502/CHNY/2018 :- 3 -: MAHENDRA KUMAR PURCHASED A PROPERTY, COMPRISING OF LAND AND BUILDING, BEARING O.S NO.277, ` NO.148/3, AT PRESENT ` NO.148/13, C.C NO.2243 & 2244, SITUATED AT KILPAUK FOR A CONSIDERA TION OF ` .6,45,00,000/- ON 01.12.2010 FROM DR.A.CHANDRAHASAN JOHNSON, DR. MRS.SATYABAMA JOHNSON, MR.RAJKUMAR JOHNSON & MR. EB ENEZER JOHNSON. SO FAR AS THE SOURCE OF PURCHASE OF THE AB OVE PROPERTY IS CONCERNED, THE ASSESSEE FURNISHED THE DETAILS BEFOR E THE LD. ASSESSING OFFICER BY CLAIMING THAT HE RECEIVED ` .4/- CRORES VIDE JOINT LOAN ACCOUNT NO.48142344 DATED 21.12.2010 BY MORTGAGING THE PROP ERTY AT STANDARD CHARTERED BANK (LOAN ACCOUNT, CHENNAI BRAN CH, AND THE SOURCE OF THE BALANCE AMOUNT OF ` .3,03,05,000 WAS OUT OF PERSONAL ACCOUNT OF THE PARTNERS. IT WAS FURTHER CLAIMED TH AT THE PROFIT/LOSS YIELDED FROM THE SALE OF THE SAID LAND/BUILDING WAS EQUALLY SHARED BY THE CO-OWNERS AND WAS ADMITTED IN THE INDIVIDUAL HA NDS. THE ASSESSEE WAS ASKED TO PRODUCE THE COMPUTATION OF SHORT TERM CAPITAL GAINS FROM THE SALE OF THE PROPERTY, WHICH WAS PROVIDED. THE ASSESSEE ADMITTED SHORT TERM CAPITAL GAINS AT ` .5,36,233/-. WHILE MAKING THE COMPUTATION, THE ASSESSEE CLAIMED INTEREST EXPENSES OF ` .32,60,199/- AND ADDED TOWARDS THE PURCHASE COST OF THE SAID PRO PERTY. HOWEVER, THE LD. ASSESSING OFFICER DID NOT ACCEPT THE INTERE ST PAYMENT/ THE EXPENSES ON THE REASONS STATED IN THE ASSESSMENT OR DER. ON APPEAL BEFORE THE LD.CIT(A), THE STAND TAKEN BY THE LD. AS SESSING OFFICER WAS ITA NO.1502/CHNY/2018 :- 4 -: AFFIRMED. THE ASSESSEE IS AGGRIEVED AND IS IN APPEA L BEFORE THIS TRIBUNAL. NOW THE QUESTION ARISES WHETHER THE PAYME NT OF INTEREST ON ACQUISITION OF THE PROPERTY SHOULD BE ALLOWED WHILE COMPUTING THE CAPITAL GAINS. THE ASSESSEE ALSO FILED THE PAPER B OOK RUNNING INTO 1 TO 47 PAGES. AT THIS STAGE, THE BENCH ASKED THE LD.COU NSEL FOR THE ASSESSEE WHETHER THIS PAPER BOOK WAS FILED BEFORE T HE LD.CIT(A), HE FAIRLY AGREED THAT EXCEPT THE WRITTEN SUBMISSIONS, NO OTHER DOCUMENT WAS FILED BEFORE THE LD. FIRST APPELLATE AUTHORITY. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT ALL THE DOCUMENTS, WHICH WE RE FILED BEFORE THE LD. ASSESSING OFFICER, SHOULD HAVE BEEN FILED BEFOR E THE LD.CIT(A) IN REACHING TO A FAIR CONCLUSION. AT THE SAME TIME, T HERE IS NO DISCUSSION/VERIFICATION MADE BY THE LD. ASSESSING O FFICER DURING THE ASSESSMENT PROCEEDINGS WITH RESPECT TO USE OF THE L OAN FOR ACQUISITION OF THE PROPERTY. IN SUCH A SITUATION, WE REMAND THI S APPEAL TO THE FILE OF LD. ASSESSING OFFICER TO EXAMINE WHETHER THE LOA N WAS USED FOR ACQUISITION OF THE PROPERTY AND ALSO WHETHER THE IN TEREST SHOULD BE TREATED AS COST OF ACQUISITION, CONSIDERING THE DEC ISION OF HONBLE JURISDICTIIONA HIGH COURT IN THE CASE OF K.RAJA GOP AL RAO (SUPRA). AFTER EXAMINING THE FACTUAL MATRIX, THE LD. ASSESSING OFF ICER IS DIRECTED TO DECIDE A FRESH IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO FURNISH THE NECESSARY EVIDENCE, IF ANY, IN SUPPORT OF HIS CLAIM FOR WHICH ITA NO.1502/CHNY/2018 :- 5 -: DUE OPPORTUNITY BE PROVIDED TO THE ASSESSEE. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. 4. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT, AT TH E CONCLUSION OF THE HEARING, IN THE PRESENCE OF LEARN ED COUNSEL FROM BOTH SIDES ON 04 TH DECEMBER, 2018. SD/ - SD/ - ! ' # $ % & $ % ' (A.MOHAN ALANKAMONY) & ' / ACCOUNTANT MEMBER ( ) (JOGINDER SINGH) / VICE PRESIDENT () / CHENNAI *+ / DATED: 04 TH DECEMBER, 2018. K S SUNDARAM +,$$ -.$/. / COPY TO: $ 1 . / APPELLANT 3. $ 0$!' / CIT(A) 5. .12$ 3 / DR 2. / RESPONDENT 4. $ 0 / CIT 6. 24$5 / GF