DR MUKESH SHANTILAL DAFTARY, MUMBAI V. ITO 11(3)(), MUMBAI

ITA 1903/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1073 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 20-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 143(3)

Judgement Text

ITA NO.1903/M/2014 DR. MUKESH SHANTILAL D AFTARY 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1903/MUM/2014 FOR ASSESSMENT YEAR: 2007-08 DR MUKESH SHANTILAL DAFTARY, 49, MADHUBAN APARTMENTS, WORLI HILLS ROAD, WORLI, MUMBAI -400061 PAN: AABPD2633B VS. INCOME TAX OFFICER -11(3)(1), AAYAKAR BHAVAN , MK ROAD MUMBAI 400020 (APPELLANT) (RESPONDENT) ASSESSEE REPRESENTED BY SH. HIRO RAI - ADVOCATE REVENUE REPRESENTED BY SH. SUMAN KUMAR -DR DATE OF HEARING 12.04.2017 DATE OF ORDER 28.04.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH JUDICIAL MEMBER ; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF COMMISSIONER (APPEALS) DATED 1 6 DECEMBER 2013 FOR ASSESSMENT YEAR 2007 -08. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RET URN OF INCOME FOR RELEVANT ASSESSMENT YEAR ON 31 JULY 2007 DECLARING INCOME OF RS. 9,99,780/- . THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 16 DECEMBER 2009. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R BESIDES THE OTHER ADDITION AND DISALLOWANCE DISALLOWED INTEREST EXPENSES OF RS . 8,18,239/-. THE ASSESSING OFFICER DISALLOWED INTEREST EXPENSES HOLDING THAT H OUSING LOANS WERE OBTAINED FROM DIFFERENT INSTITUTIONS ON THE SAME PROPERTY. T HERE IS NO NEXUS BETWEEN ALL THE LOANS AND THE HOUSE PROPERTY CONCERNED. ON APPE AL BEFORE COMMISSIONER (APPEALS) THE ACTION OF ASSESSING OFFICER WAS SUSTA INED. AGGRIEVED, BY THE ORDER OF COMMISSIONER (APPEALS) THE ASSESSEE HAS FILED PR ESENT APPEAL BEFORE US. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL; ITA NO.1903/M/2014 DR. MUKESH SHANTILAL D AFTARY 2 (I) THE LEARNED COMMISSIONER (APPEAL) ERRED IN CONFIRMI NG THE DISALLOWANCE OF INTEREST OF RS. 8,18,239/- CLAIMED IN RELATION T O INCOME FROM HOUSE PROPERTY. (II) THE LEARNED COMMISSIONER (APPEALS) FAILED TO CONSID ER THE EVIDENCE FILED BEFORE HIM SHOWING THE CONNECTION BETWEEN THE LOANS TAKEN FROM NKGSB AND CITIBANK AND THE ACQUISITION OF PROPERTY. 3. WE HAVE HEARD THE LEARNED AR OF THE ASSESSEE AND TH E LEARNED DR FOR REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L EARNED AR OF THE ASSESSEE ARGUED THAT DURING THE ASSESSMENT THE ASSESSEE WAS ASKED TO FURNISH THE DETAIL OF INTEREST PAID TO VARIOUS PARTIES. IN RESPONSE TO TH E QUARRIES RAISED BY ASSESSING OFFICER, THE ASSESSEE FURNISHED THE DETAIL OF INTER EST PAID ON VARIOUS LOANS, FOR BOTH SECURED AND UNSECURED FROM VARIOUS FINANCIAL INSTITUTION AND BANKS VIZ KOTAK BANK, HDFC BANK ETC. NO FURTHER CLARIFICATION WAS SOUGHT BY THE ASSESSING OFFICER. THE ASSESSING OFFICER DISALLOWED THE INTEREST EXPENSES OF RS.8,18,239/-. THE DISALLOWANCE WAS MADE WITHOUT GI VING SUFFICIENT AND ADEQUATE OPPORTUNITY FOR EXPLAINING THE NEXUS OF LO AN QUA THE HOUSE PROPERTIES. DURING THE FIRST APPELLATE STAGE THE ASSESSEE FURNI SHED THE DETAILS OF VARIOUS LOANS ALONG WITH SANCTIONED LETTER FROM VARIOUS BANKS AND INSTITUTIONS. THE ASSESSEE EXPLAINED THAT ASSESSEE OWNED THREE RESIDENTIAL PRO PERTIES, ONE HOUSE AT DEVLALI, NASIK AND TWO FLATS AT MADHUBAN APARTMENTS CO-OPERA TIVE HOUSING SOCIETY LTD AT WORLI MUMBAI. THE RESIDENTIAL PROPERTY AT DEVLAL I WAS CONSIDERED AS SELF OCCUPIED PROPERTY AND THE OTHER TWO FLATS ARE CONSI DERED TO BE LET OUT PROPERTIES. IN ADDITION TO THE ABOVE THE ASSESSEE ALSO OWNS A C OMMERCIAL PROPERTY IE. 207 MARTHANDA WORLI MUMBAI. THE ASSESSEE INCURRED INTER EST EXPENSES OF RS.95,222/- AGAINST THE HOUSE PROPERTY INCOME FROM FLAT NUMBER 53A MADHUBAN APARTMENTS CO-OPERATIVE HOUSING SOCIETY LTD AT WORL I. THE ASSESSEE PURCHASED THIS LET BY AVAILING TWO LOANS FROM NKGSB BANK OF R S. 9,75,450/- , REPAIRS AND RENOVATION LOAN OF RS. 2,50,000/-. THE DOCUMENTARY EVIDENCE WAS FILED BEFORE ASSESSING OFFICER. THE COMMERCIAL PROPERTY WAS PURC HASED IN THE YEAR 2003 FOR CONSIDERATION OF RS. 73,26,250/-. THE COMMERCIAL PR OPERTY WAS PURCHASED BY AVAILING HOME LOAN OF RS. 63,00,000/- FROM CITIBANK AND THE BALANCE CONSIDERATION WAS PAID OUT OF THE OVERDRAFT FACILIT IES AVAILED FROM HDFC BANK. ITA NO.1903/M/2014 DR. MUKESH SHANTILAL D AFTARY 3 THE ASSESSEE IN SUBSEQUENT FINANCIAL YEAR HAD AVAIL ED FUNDS FROM VARIOUS ENTITIES SUCH AS KOTAK MAHINDRA BANK, M.S. DAFTARY (HUF), MS . REKHA BEDANI AND DR BHARAT KAMDAR AT LOWER INTEREST RATE TO PAY THE HIG HER FLOATING-RATE INTERESTS AVAILED FROM CITIBANK. THE LEARNED CIT(A) REFERRED THOSE DOCUMENTS AND INFORMATION TO THE ASSESSING OFFICER FOR HIS REMAN D REPORT. THE ASSESSING OFFICERS FURNISHED HIS REMAND REPORT; HOWEVER, THE SAID REMAND REPORT WAS NOT DISCUSSED BY LD COMMISSIONER (APPEALS) IN HIS ORDER . IT WAS FURTHER ARGUED THAT IN THE SUBSEQUENT YEARS IN ASSESSMENT YEARS 2009-10 AND IN 2013-14, THE SIMILAR INTEREST EXPENSES WAS ALLOWED BY THE REVENUE/ ASS ESSING OFFICER IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. THE COPY OF IN THE ASSESSMENT ORDERS FOR THOSE ASSESSMENT YEAR 2009 -1 0 AND IN 2013 -14 WERE PLACED ON RECORD. 4. ON THE OTHER HAND THE LEARNED AND DR FOR THE REVENU E SUPPORTED THE ORDER OF AUTHORITIES BELOW. THE LEARNED DR FOR THE REVENUE F URTHER ARGUED THAT LD COMMISSIONER (APPEALS) CONSIDERED ALL THE FACTS OF THE REMAND REPORT. IT WAS FURTHER ARGUED THAT SANCTION AND DISBURSEMENT ARE T WO DIFFERENT THINGS. THE BANK IS ISSUING THE DETAILS OF THE BANK INTEREST, THERE IS NO CERTIFICATE THAT ANY INTEREST WAS PAID BY THE ASSESSEE. THE LEARNED DR FOR THE RE VENUE FURTHER SUBMITTED THAT MATTER MAY BE SENT TO THE ASSESSING OFFICER/ LEARNE D COMMISSIONER (APPEALS) FOR VERIFICATION OF FACT, IF ANY INTEREST WAS PAID BY THE ASSESSEE DURING THE RELEVANT YEAR UNDER CONSIDERATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND WITH THE ASSISTANCE OF THE LD REPRESENTATIVE GONE THROUGH THE ORDERS OF TH E AUTHORITIES BELOW. WE HAVE SEEN THAT AFTER SEEKING DETAILS OF THE INTEREST EXP ENSES FROM THE ASSESSEE THE ASSESSING OFFICER HAS NOT GIVEN FURTHER OPPORTUNITY TO EXPLAIN THE PURPOSE AND THE NEXUS OF THE LOAN. THE LEARNED COMMISSIONER (AP PEALS) DURING THE APPELLATE PROCEEDINGS, ON FILING ADDITIONAL EVIDENCES CALLED THE REMAND REPORT FROM ASSESSING OFFICER. THE ASSESSING OFFICER FILED HIS REMAND REPORT ON 11 FEBRUARY 2013. IN THE REMAND REPORT THE ASSESSING OFFICER DI SCLOSED THAT THE INTEREST EXPENSES OF RS.95,222/-PAID TO NKGSB SHOULD NOT BE ALLOWED AS THE ASSESSEE ITA NO.1903/M/2014 DR. MUKESH SHANTILAL D AFTARY 4 HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE THAT SUCH LOAN WAS UTILISED FOR ACQUIRING FLAT NO.53A MADHUBAN APARTMENTS, THIS FL AT WAS OFFERED AS SECURITY. THE ASSESSING OFFICER FURTHER STATED THAT THERE IS NEXUS BETWEEN UNSECURED LOAN FOR THE REPAYMENT OF CITIBANK LOAN, BUT THE ASSESSE E HAS NOT FURNISHED ANY EVIDENCE TO SHOW THAT CITIBANK LOAN WAS TAKEN AND U TILISED FOR ACQUISITION OF MARTHANDA PROPERTY AND THE INTEREST EXPENSES OF RS. 9,08,701/-SHOULD NOT BE ALLOWED. THE ASSESSING OFFICER FURTHER STATED THAT A LOAN OF RS.4,00,000/-WAS APPEARING SINCE BEGINNING OF 1 ST APRIL 2006 AND AS SUCH NOT NEW LOAN INTRODUCED DURING THE YEAR AND HENCE THE ADDITION MAY BE DELET ED. BEFORE THE TRIBUNAL THE ASSESSEE HAS FILED A COPY OF ASSESSEES APPLICATION / LETTER DATED 11 FEB 2011ALONGWITH ITS ANNEXURE. THE LD AR FOR THE ASSE SSEE CERTIFIED ABOUT FILING THIS APPLICATION BEFORE LD COMMISSIONER (APPEAL). ALONG WITH THE APPLICATION DATED 11 FEB 2011 THE ASSESSEE FILED COPY OF THE SA NCTION OF LOAN FROM NKGSB, WHEREIN THE PURPOSE OF LOAN IS SPECIFICALLY MENTION ED HOUSING AND UPGRADATION OF FLAT, THE ASSESSEE DEPOSITED THE T ITLE DEED OF THE SAID FLAT AS SECURITY. THE ASSESSEE HAS ALSO FILED COPY OF RECEI PT OF RS.23,00,00/- ACKNOWLEDGING THE SALE CONSIDERATION BY SELLER FOR FLAT NO. 23A MADHUBAN APARTMENTS THROUGH THE BANKERS CHEQUES (FINANCE AMO UNTS), COPY OF LOAN DISBURSEMENT LETTER DATED 29.10.2002 AND SANCTION L ETTER DATED 28.10.2002 FROM BY CITY BANK FOR RS. 63,00,000/-. THE LD COMMISSION ER (APPEALS) HAS NOT GIVEN ANY FINDING ON ALL THESE EVIDENCES. AS PER OUR CONS IDERED VIEW THE LD COMMISSIONER (APPEALS) TOTALLY IGNORED THE EVIDENTI ARY VALUE OF THIS DOCUMENTS. CONSIDERING, THE CIRCUMSTANCES OF THE FACTS AND THE DOCUMENTS FILED BY THE ASSESSEE WE FIND THAT THE ASSESSEE HAD FILED SUFFIC IENT EVIDENCE TO PROVE THE NEXUS OF THE FUNDS AVAILED FROM THE FINANCIAL INSTI TUTIONS IN ACQUIRING THE PROPERTY AGAINST WHICH THE INTEREST EXPENSES WAS CL AIMED BY ASSESSEE. IN OUR CONSIDERED VIEW THE ASSESSEE HAS PROVED THE NEXUS A ND THE PURPOSE OF HOUSING LOAN QUA THE PROPERTIES IN RESPECT OF WHICH THE INT EREST EXPENSES WAS CLAIMED. EVEN OTHERWISE THE SIMILAR CLAIM OF ASSESSEE WAS AC CEPTED BY REVENUE IN ASSESSMENT IN AY-2009-10 AND AGAIN IN AY -2013-14 IN THE ASSESSMENT ORDER ITA NO.1903/M/2014 DR. MUKESH SHANTILAL D AFTARY 5 PASSED UNDER SECTION 143(3) OF THE ACT. HENCE, THE GROUND NO. 1AND 2 RAISED BY THE ASSESSEE IN THIS APPEAL ARE ALLOWED. 6. IN THE RESULT APPEALS OF THE ASSESSEE IS ALLOWED. ORDER ANNOUNCE IN THE OPEN COURT ON 28 TH DAY OF APRIL 2017. SD/- SD/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 28/04/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/