Shri Hitesh H Budhbhatti, Ahmedabad V. The Income Tax Officer, Ward-5(1)(3), Ahmedabad

ITA 1604/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1044 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 15-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Salary income; Wrong claim
• Section: 143(3)

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO. 1604/AHD/2016 ( ASSESSMENT YEAR : 2012-13) SHRI HITESH H BUDHBHATTI A/302, J 9 FLATS, NR. ARYAMAN BUNGALOWS, NR. THALTEJ RLY CROSSING, AHMEDABAD 380 059 / VS. ITO WARD - 5(1)(3), AHMEDABAD ./ ./ PAN/GIR NO. : ACUPB4786A ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI BANDISH SOPARKAR, A.R. / RESPONDENT BY : SHRI VIRENDRA SINGH, SR.D.R. DATE OF HEARING 06/03/2019 !'# / DATE OF PRONOUNCEMENT 15/03/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS)-5, AHMEDABAD (CIT(A) IN SHORT), DATED 1 8.04.2016 ARISING IN THE ASSESSMENT ORDER DATED 12.03.2015 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2012-13. 2. AS PER THE GROUNDS OF APPEAL, THE ASSESSEE IS AG GRIEVED BY THE DISALLOWANCE OF INTEREST ON BORROWED CAPITAL TO THE EXTENT OF ITA NO.1604/AHD/16 [SHRI HITESH H BUDHBHATTI VS. ITO] A.Y. 2012-13 - 2 - RS.6,77,014/- INSTEAD OF CLAIM OF RS.8,27,014/- UND ER S.23(2)(B) OF THE ACT. 3. BRIEFLY STATED, THE ASSESSEE, A SALARIED EMPL OYEE FILED RETURN OF INCOME FOR THE AY 2012-13 SHOWING GROSS SALARY OF R S.19,61,077/- FROM BENNETT COLEMAN & CO. LTD. THE ASSESSEE INTER ALIA CLAIMED DEDUCTION ON INTEREST ON BORROWED CAPITAL AT RS.8,2 7,014/- UNDER S.24 OF THE ACT UNDER THE HEAD INCOME FROM HOUSE PROPER TY. THE RETURN FILED BY THE ASSESSEE WAS SUBJECTED TO SCRUTINY ASS ESSMENT. THE AO OBSERVED THAT THE ASSESSEE HAS NOT DERIVED ANY INCO ME FROM HOUSE PROPERTY FOR THE PURPOSES OF ANNUAL VALUE CONTEMPLA TED UNDER S.23 OF THE ACT AND ACCORDINGLY RAISED QUERY ALLOWABILITY O F DEDUCTION OF INTEREST AGAINST THE SELF-OCCUPIED HOUSE PROPERTY W HOSE ANNUAL VALUE WAS DECLARED AT NIL IN THE RETURN OF INCOME BY THE ASSESSEE. IN RESPONSE, THE ASSESSEE SUBMITTED THAT HE OWNS A RES IDENTIAL PROPERTY AT SHILAJ RAILWAY CROSSING ALONGWITH HIS MOTHER AS A C O-OWNER. THE ASSESSEE CLAIMS TO HAVE LET OUT THE CO-OWNED PROPER TY TO HER MOTHER AT A RENT OF RS.30,000/- PER MONTH. THE ASSESSEE FURT HER CLAIMED THAT HE HAS OCCUPIED A PROPERTY SITUATED AT VASTRAPUR BELON GING TO HER MOTHER (MRS. DAYA BUDHBHATTI) AT RS.42,000/- PER MONTH. T HE ASSESSEE ACCORDINGLY CLAIMED THAT HE IS ENTITLED FOR DEDUCTI ON OF THE INTEREST ON BORROWED FUNDS UTILIZED FOR PURCHASE OF RESIDENTIAL HOUSE AT SILAJ AGAINST THE RENTAL INCOME SO DERIVED FROM HER MOTHE R. CONSEQUENTLY, THE ASSESSEE ACCORDINGLY CLAIMED A DEDUCTION OF RS. 8,27,014/- TOWARDS INTEREST ON BORROWED CAPITAL FROM INCOME REPORTED U NDER THE HEAD SALARY INCOME AND INCOME FROM OTHER SOURCES. T HE AO HOWEVER NOTED THAT THE ASSESSEE IS EMPLOYED IN AHMEDABAD AN D THE PROPERTY SITUATED AT SHILAJ IS WITHIN THE MUNICIPAL LIMIT OF THE CITY. THEREFORE, IN TERMS OF SECTION 23(2) OF THE ACT, GROSS ANNUAL VALUE OF THE PROPERTY AT SHILAJ SHALL BE TAKEN AT NIL. THE AO A LSO NOTICED THAT THE ASSESSEE HIMSELF HAS TAKEN THE ANNUAL VALUE AS NIL IN THE RETURN, THE COMPUTATION WHEREOF WAS REVISED IN THE PROCEEDINGS BEFORE AO TO ITA NO.1604/AHD/16 [SHRI HITESH H BUDHBHATTI VS. ITO] A.Y. 2012-13 - 3 - CONTEND THAT THE PROPERTY IS GIVEN ON RENT. THE AO ACCORDINGLY HELD THAT THE PROPERTY IS A SELF-OCCUPIED PROPERTY AND A CCORDINGLY, THE ASSESSEE IS ENTITLED TO CLAIM INTEREST ON BORROWED CAPITAL LIMITED TO THE EXTENT OF SPECIFIED SUM I.E. RS.1,50,000/-. THE AO FURTHER QUESTIONED THE BONAFIDES OF THE RENT PAID TO HIS MOTHER IN THE ABSENCE OF ANY CONCRETE DOCUMENTS SUCH AS BANK STATEMENT ETC. THE AO ACCORDINGLY RESTRICTED THE CLAIM OF INTEREST TO THE EXTENT OF R S.1,50,000/- ENTITLED TO ASSESSEE REFERRED UNDER S.23(2) OF THE ACT AND D ISALLOWED THE REMAINING AMOUNT OF RS.6,77,014/- AND ADDED THE SAM E IN THE HANDS OF THE ASSESSEE WHILE DETERMINING THE ASSESSED INCOME. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND REITERATED ITS CLAIM. THE CIT(A) HOWEVER FOUND THE CLAIM OF THE ASSESSEE TO BE BEREFT OF ANY MERITS. THE CIT(A) EN DORSED THE ACTION OF THE AO THAT THE CLAIM OF THE ASSESSEE THAT PROPERTY ALLEGEDLY GIVEN ON RENT (TO MOTHER AND ALSO A CO-OWNER) WAS ONLY A DEV ICE TO AVAIL THE FULL DEDUCTION OF INTEREST EXPENSES AND TO EXCLUDE HIMSELF FROM THE PURVIEW OF SECTION 23(2) OF THE ACT. THE CIT(A) AC CORDINGLY DECLINED TO INTERFERE WITH THE ORDER OF THE AO AND DISMISSED THE CLAIM OF THE ASSESSEE. 5. FURTHER AGGRIEVED, THE ASSESSEE KNOCKED THE DOOR OF THE TRIBUNAL. 6. THE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE HIMSELF HAS OCCUPIED THE RESIDENCE AT VASTRAPUR BEL ONGING TO HER MOTHER ON A RENTAL BASIS. LIKEWISE, HER MOTHER HAS ALSO OCCUPIED THE RESIDENTIAL PROPERTY BELONGING TO ASSESSEE AT SHILA J ON RENTAL BASIS AND PAID RENT TO THE ASSESSEE WHICH COULD BE TAKEN AS G ROSS ANNUAL VALUE FOR THE PURPOSES OF SECTION 23(1) R.W.S. 23(3) OF T HE ACT. THE LEARNED AR FOR THIS PURPOSE REFERRED TO THE CASH VOUCHERS S HOWING RECEIPT OF RENT IN CASH FROM MOTHER. THE LEARNED AR ALSO REFE RRED TO AN AFFIDAVIT ITA NO.1604/AHD/16 [SHRI HITESH H BUDHBHATTI VS. ITO] A.Y. 2012-13 - 4 - DATED 25 TH FEBRUARY, 2015 TO SUPPORT ITS CLAIM. THE LEARNED AR FOR THE ASSESSEE ALSO REFERRED TO THE DECISION OF THE CO-OR DINATE BENCH OF TRIBUNAL IN THE CASE OF SMT. TUPUR CHATTERJI VS. AC IT [2014] 51 TAXMANN.COM 240 (MUMBAI-TRIB.) FOR THE PROPOSITION THAT INTEREST ON BORROWED FUNDS IS FULLY DEDUCTIBLE AGAINST THE ANNU AL VALUE WITHOUT ANY STATUTORY RESTRICTION OF RS.1,50,000/- BENCHMAR KED FOR THE PURPOSES OF ONLY SELF-OCCUPIED PROPERTY SPECIFIED UNDER S.23(2) OF THE ACT. 7. THE LEARNED DR FOR THE REVENUE, ON THE OTHER HAN D, RELIED UPON THE ORDERS OF THE AO AND CIT(A) AND SUBMITTED IN FU RTHERANCE THAT THE CONDUCT OF THE ASSESSEE IS SELF-EVIDENT. IT WAS CO NTENDED THAT THE ASSESSEE HIMSELF HAS OMITTED TO DECLARE ANY RENTAL INCOME FROM THE PROPERTY AT THE FIRST PLACE. WHEN CONFRONTED ABOUT THE RESTRICTION PLACED FOR DEDUCTION OF INTEREST ON SELF-OCCUPIED P ROPERTY, THE ASSESSEE HAS ATTEMPTED TO SHOW THE PROPERTY TO BE A CTUALLY LET OUT UNDER S.23(3) OF THE ACT TO AVOID THE STATUTORY RES TRICTION OF ALLOWABILITY OF DEDUCTION OF INTEREST (RS.1,50,000/ -) SHOWING THE RECEIPT OF RENTAL INCOME IN CASH FROM MOTHER. THE LEARNED DR SUBMITTED THAT THE ENTIRE GAMUT OF ACTION ON THE PA RT OF THE ASSESSEE SMACKS OF MALAFIDE TO ASSERT A WRONG CLAIM OF FULL DEDUCTION OF INTEREST AGAINST NON-EXISTENT RENTAL INCOME CLAIMED TO BE DERIVED FROM HIS MOTHER/CO-OWNER IN CASH WHICH CANNOT BE BENEFIT ED. THE LEARNED DR SUBMITTED THAT THE AO HAS RIGHTLY REJECTED THE A FFIDAVIT OF THE ASSESSEE WHICH IS CLEARLY SELF-SERVING IN NATURE. THE LEARNED DR ACCORDINGLY SUBMITTED THAT THE AO HAS RIGHTLY OBSER VED THE LACK OF ANY CREDIBLE DOCUMENTARY EVIDENCE TO SUPPORT THE RENTAL INCOME AND CONSEQUENTLY, RESTRICTED THE INTEREST CLAIM ASSOCIA TED TO THE GROSS ANNUAL VALUE AS PER THE SCHEME OF THE ACT. THE LEA RNED DR ACCORDINGLY SUBMITTED THAT NO INTERFERENCE WITH THE ORDER OF THE CIT(A) IS CALLED FOR. ITA NO.1604/AHD/16 [SHRI HITESH H BUDHBHATTI VS. ITO] A.Y. 2012-13 - 5 - 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE ALLOWABILITY OF INTEREST EXPENDITURE ON BORROWED CA PITAL FOR PURCHASE OF RESIDENTIAL HOUSE UNDER S.24 OF THE ACT IS IN QU ESTION. AS PER SECTION 23(2) OF THE ACT, THE GROSS ANNUAL VALUE OF THE RESIDENTIAL HOUSE SHALL BE TAKEN AT NIL WHERE SUCH HOUSE IS I N THE OCCUPATION OF THE OWNER FOR HIS OWN RESIDENCE OR WHERE THE OWNER OF THE HOUSE IS PREVENTED FROM OCCUPYING THE HOUSE OWING TO HIS EMP LOYMENT ETC. AT OTHER PLACE. THE ANNUAL VALUE OF SUCH HOUSE SHALL BE TAKEN AT NIL AND CONSEQUENTLY, THE DEDUCTION OF INTEREST ON BORROWED CAPITAL IN SUCH CIRCUMSTANCES IS RESTRICTED TO THE EXTENT OF RS.1,5 0,000/- UNDER S.24 OF THE ACT FOR THE RELEVANT ASSESSMENT YEAR. THE ASSE SSEE, IN THE INSTANT CASE, HAS ALSO CLAIMED NIL ANNUAL VALUE ON THIS R ESIDENTIAL HOUSE IN THE RETURN OF INCOME. HOWEVER, BY WAY OF REVISED C OMPUTATION IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS ALTERED HIS STAND AND CLAIMED THAT HE WAS NOT IN ACTUAL OCCUPATION OF THE RESIDENTIAL HOUSE (CO-OWNED BY HIM ALONGWITH HIS MOTHER). IT W AS CLAIMED THAT THE RESIDENTIAL HOUSE AT SHILAJ WAS ACTUALLY OCCUPI ED BY HIS MOTHER AND THUS, THE RESIDENTIAL PROPERTY WAS LET OUT TO MOTHE R AT A MONTHLY RENTAL OF RS.30,000/- PER MONTH, WHICH WAS RECEIVED IN CA SH. THE ASSESSEE ACCORDINGLY HAS CLAIMED THAT THE RESIDENTIAL HOUSE BEING A LET OUT A PROPERTY, THE STATUTORY RESTRICTION FOR ALLOWABILIT Y OF INTEREST ON BORROWED CAPITAL IS NOT APPLICABLE. THE ASSESSEE T HUS SEEKS DEDUCTION OF THE WHOLE OF THE AMOUNT OF INTEREST EXPENDITURE AGAINST THE SO CALLED ANNUAL VALUE/RENT PURPORTEDLY RECEIVED FROM MOTHER. 9. THE ANSWER TO THE CONTROVERSY THUS ESSENTIALLY H INGES UPON AS TO WHETHER THE HOUSE PROPERTY WAS ACTUALLY LET OUT AS CLAIMED OR NOT. IF THE PROPERTY CAN BE TAKEN TO BE ACTUALLY LET OUT DU RING THE YEAR IN TERMS OF SECTION 23(3) OF THE ACT, IT WILL AUTOMATI CALLY GET EXCLUDED FROM THE SWEEP OF SECTION 23(2) OF THE ACT WHICH WO ULD IN TURN EXCLUDE THE RESTRICTION OF QUANTUM OF DEDUCTION OF INTERFERENCE UNDER S. 24 OF THE ACT. ITA NO.1604/AHD/16 [SHRI HITESH H BUDHBHATTI VS. ITO] A.Y. 2012-13 - 6 - 10. TURNING TO THE FACTS, THE ASSESSEE HAS CLAIMED THAT THE RESIDENTIAL HOUSE WAS ACTUALLY LET OUT DURING THE YEAR TO HIS M OTHER FOR WHICH HE HAS RECEIVED RENT OF RS.30,000/- FROM MOTHER ALBEIT IN CASH. ON THE BASIS OF PROPERTY BEING LET OUT, THE ASSESSEE SEEKS CLAIM OF INTEREST DEDUCTION TO FULL EXTENT. THE ASSESSEE HAS ALSO TR IED TO SUPPORT HIS CASE OF LET OUT BY AN AFFIDAVIT. WHEN SEEN IN THE CONTEXT, IT IS VERY DIFFICULT TO BELIEVE THE POSITION TAKEN BY THE ASSE SSEE. AS NOTICED EARLIER, THE ASSESSEE, AT FIRST INSTANCE, HAS NOT D ECLARED RENTAL INCOME WHILE FILING THE RETURN OF INCOME DULY VERIFIED UND ER S.140 OF THE ACT. THE OMISSION TO DISCLOSE THE SO-CALLED RENT INCOME DERIVED FROM MOTHER IN THE RETURN OF INCOME IS NOT EXPLAINED. N EEDLESS TO SAY, A PERSON FILING THE RETURN OF INCOME REQUIRES TO VERI FY THE CONTENTS OF THE RETURN TO BE TRUE AND ANY FALSIFICATION IN SUCH VERIFICATION HAS SERIOUS CONSEQUENCES UNDER CHAPTER XXII OF THE ACT. THUS, THE INCOME CLAIMED TO HAVE BEEN RECEIVED AND NOT DECLAR ED IN THE RETURN CANNOT BE SEEN IN A LIGHT HEARTED BANNER. THE ASSE SSEE HAS CONVENIENTLY REVISED THE COMPUTATION TO INTRODUCE T HE SOURCE OF RENTAL INCOME FROM MOTHER WHO ALSO HAPPENS TO BE CO-OWNER OF THE SAME PROPERTY. THE RECEIPT HAS BEEN SHOWN TO BE IN CASH TO SHUN ANY POSSIBILITY OF VERIFICATION. THUS, NO TRAIL IS AVA ILABLE TO VERIFY THE CORRECTNESS OF THE VERSION OF THE ASSESSEE IN A REA SONABLE MANNER. THUS, ONE HAS TO RELY ONLY ON THE PREPONDERANCE OF PROBABILITIES. THE VERSION OF THE ASSESSEE IS PRIMA FACIE IMPROBABLE HAVING REGARD TO THE GROUND REALITIES. THE ASSESSEE NEITHER SATISFIES T HE CONDITION FROM EXCLUSION FROM THE AMBIT OF SECTION 23(2) OF THE AC T NOR SATISFIES ITS CASE FOR INCLUSION UNDER S.23(3) OF THE ACT ON FACT S. THE LOWER AUTHORITIES HAVE RIGHTLY QUESTIONED THE VERACITY OF CLAIM OF PROPERTY BEING ACTUALLY LET OUT. THE AFFIDAVIT FILED WAS CLE ARLY BALD AND A SELF- SERVING DOCUMENT. NO CROSS EXAMINATION OF THE DEPON ENT OF THE AFFIDAVIT HAS BEEN OFFERED THEREIN. ON A QUERY FROM THE BENCH ABOUT THE PAYMENT OF ELECTRICITY BILL BY THE LICENSEE OF THE PROPERTY, NO EVIDENCE ITA NO.1604/AHD/16 [SHRI HITESH H BUDHBHATTI VS. ITO] A.Y. 2012-13 - 7 - COULD BE FURNISHED TO PROVE ACTUAL OCCUPATION BY MO THER ON RENTAL BASIS. IT IS ALSO DIFFICULT TO COMPREHEND SUCH A C LAIM OF THE ASSESSEE ON THE TOUCH-STONE OF SOCIETAL VALUE PREVALENT AND ETHOS IN INDIAN SOCIETY. THE CASE OF THE ASSESSEE TOWARDS CLAIM OF RENT FROM MOTHER FOR OCCUPATION OF HIS HOUSE CLEARLY APPEARS BE EYEW ASH TO MERELY PUT THE PROPERTY IN THE BRACKET OF SECTION 23(3) OF THE ACT WITH A VIEW TO CLAIM DEDUCTION OF FULL INTEREST COSTS WITHOUT ANY RESTRICTION APPLICABLE TO SELF-OCCUPIED HOUSE. THE ASSESSEE HA S REFERRED TO THE DECISION OF THE CO-ORDINATE BENCH IN SMT. TUPUR CHA TTERJI (SUPRA) WHICH DOES NOT APPEAR TO BE ANY ASSISTANCE TO THE C ASE OF THE ASSESSEE IN HAND IN VIEW OF ALTOGETHER DIFFERENT FACTUAL MAT RIX. WE DO NOT FIND ANY FORCE IN THE PLEA OF THE ASSESSEE. THE CIT(A) IN OUR VIEW HAS RIGHTLY ENDORSED THE ACTION OF THE AO. WE THUS DEC LINE TO INTERFERE. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. SD/- SD/- (RAJPAL YADAV) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 15/03/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 15/03/20 19