Sarfaraz Hussainali Lakhani, Hyderabad V. Dy. Commissioner Income Tax, Circle-16(1), Hyderabad

ITA 1682/Hyd/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7409 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 04-04-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 03-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: SANJAY MUTHA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER I.T.A. NO. 1682/HYD/2017 ASSESSMENT YEAR: 2013-14 SRI SARFARAZ HUSSAINALI LAKHANI, SECUNDERABAD [PAN: ABEPL9890L] VS DCIT, CIRCLE-16(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI SANJAY MUTHA, AR FOR REVENUE : SHRI NILANJAN DEY, DR DATE OF HEARING : 04-04-2019 DATE OF PRONOUNCEMENT : 03-05-2019 O R D E R PER SMT. P. MADHAVI DEVI, J.M. : THIS IS ASSESSEES APPEAL FOR THE AY. 2013-14, AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-4, HYDERABAD, DATED 17-07-2017. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN IND IVIDUAL AND DIRECTOR OF M/S. LSC STEELS PVT. LTD., AND ALSO PRO PRIETOR OF KUBER STEELS, FILED HIS RETURN OF INCOME FOR THE A Y. 2013-14 ON 05-10-2013, ADMITTING TOTAL INCOME AT RS. 18,08,110/ -. ITA. NO. 1682/HYD/2017 :- 2 -: 3. DURING THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF TH E INCOME TAX ACT [ACT], THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS OFFERED INTEREST INCOME FROM LSC STEEL S OF RS. 3,48,430/- AND AFTER CLAIMING A SET-OFF OF INTEREST EXPENDITURE OF RS. 15,01,360/- UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ASSESSEE WAS, THEREFORE, REQUIRED TO FU RNISH THE DETAILS OF THE EXPENDITURE CLAIMED. THE ASSESSEE EXPL AINED THAT THE INTEREST WAS PAID FOR THE LOANS TAKEN FOR ACQUISIT ION OF THE PROPERTY LOCATED AT DUNDIGAL VILLAGE AND LOANS WERE OB TAINED FROM HIS FAMILY MEMBERS. HE SUBMITTED THAT INTEREST WA S PAID TO THE FAMILY MEMBERS FOR LOANS TAKEN FOR PURCHASE OF PROPERTY. THE ASSESSEE FURNISHED A COPY OF THE BANK STATEMENT AND ALSO THE CONFIRMATIONS FROM THE RELEVANT PARTIES. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS TAKEN A LOAN FROM STATE BANK OF INDIA FOR PURCHASE OF THE SAID PRO PERTY AND THE INTEREST THEREON HAS BEEN ALLOWED AS A DEDUCTION U /S. 24(B) OF THE ACT. HOWEVER, FOR THE CLAIM OF INTEREST PA YMENT OF RS. 15,01,360/-, HE HELD THAT IT IS NOT ALLOWABLE TO BE SET-OFF AGAINST THE INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AS THE SAME WAS NOT INCURRED FOR EARNING OF THE INTEREST INCOME. HE THEREFORE DISALLOWED THE SAME. 3.1. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE CIT(A), WHO CONFIRMED THE ORDER OF ASSESSING OFFICER AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 4. THE LD. COUNSEL FOR THE ASSESSEE, REITERATING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, SUBMITTED ITA. NO. 1682/HYD/2017 :- 3 -: THAT THE ASSESSEE AND HIS BROTHER HAD PURCHASED THE PRO PERTY FOR A TOTAL CONSIDERATION OF RS. 4,57,58,530/-, INCLUD ING REGISTRATION CHARGES AND THE ASSESSEES SHARE WAS RS. 2,28,79,115/-. HE SUBMITTED THAT IN ADDITION TO OBTAININ G A LOAN FROM STATE BANK OF INDIA, ASSESSEE HAD ALSO PRO CURED LOANS FROM FAMILY MEMBERS AND AS PER THE CUSTOM IN T HE FAMILY, HE HAS PAID INTEREST TO THE FAMILY MEMBERS ON THE SAID LOANS. HE SUBMITTED THAT ASSESSEES PARENTS WHO HAD ADVA NCED THE LOANS HAD ALSO OFFERED INTEREST INCOME TO TAX IN THE IR RETURNS OF INCOME. HE HAS FILED COPIES OF THE RETURNS OF INCOME AND ALSO COMPUTATION OF INCOME OF THE PARENTS AS WELL AS THE RELATIVES, WHO HAVE ADVANCED THE LOANS TO ASSESSEE. HE ALSO SUBMITTED THAT THE SAME AMOUNT CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE AS WELL AS HIS PARENTS. HE THEREFORE PRAYED THAT THE INTEREST EXPENDITURE OF RS. 15 LAKHS BE ALLOWED AGAINST THE INCOME FROM HOUSE PROPERTY U/S. 24(B) OF THE ACT. 5. THE LD.DR WAS ALSO HEARD, WHO SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE TO BE SET-OFF AGAINST THE INCOME FROM OTHER SOURCES. HOWEVER, THE SAME CANNOT BE ALLOWED SINCE IT IS THE INTEREST INCURRED FOR SECURING OF HOUSE PROPERTY. THE REFORE, THE ASSESSEE IS ELIGIBLE TO CLAIM THE SAME FROM INCOME FR OM HOUSE ITA. NO. 1682/HYD/2017 :- 4 -: PROPERTY, IF ANY, EARNED BY THE ASSESSEE DURING THE R ELEVANT ASSESSMENT YEAR. 6.1. AS FAR AS THE INTEREST PORTION WHICH HAS BEEN DI SALLOWED IS CONCERNED, WE FIND THAT THE PARENTS OF ASSESSEE, W HO HAVE ADVANCED LOANS TO THE ASSESSEE, HAVE OFFERED THE INTERE ST TO TAX IN THEIR RETURNS OF INCOME AND THE COPIES OF THEIR RETUR NS HAVE BEEN FILED BEFORE US IN THE FORM OF A PAPER BOOK. T HUS, WE AGREE WITH THE CONTENTIONS OF ASSESSEE THAT THE SAME AMOU NT CANNOT BE TAXED IN THE HANDS OF ASSESSEE AS WELL AS RE CIPIENTS OF THE INTEREST. THEREFORE, SINCE THE PARENTS HAVE OFFER ED THE INCOME TO TAX, WE HOLD THAT NO DISALLOWANCE OR ADDITIO N CAN BE MADE IN THE HANDS OF ASSESSEE. GROUNDS ARE ACCORDING LY ALLOWED. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MAY, 2019 SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI ) ACCOUNTANT MEMBER JUDICIAL MEMB ER HYDERABAD, DATED 3 RD MAY, 2019 TNMM ITA. NO. 1682/HYD/2017 :- 5 -: COPY TO : 1. SRI SARFARAZ HUSSAINALI LAKHANI, SECUNDERABAD. C /O. SANJAY MUTHA & CO., 905/1, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD. 2. DCIT, CIRCLE-16(1), HYDERABAD. 3. CIT(APPEALS)-4, HYDERABAD. 4. PR.CIT-4, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.