M/s Capri Developers Pvt. Ltd., Chandigarh V. ACIT, C-4(1), Chandigarh

ITA 200/CHANDI/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3668 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 19-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: SUDHUIR SEHGAL
• Keywords: Business income; Business expenditure; Bonafide belief

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, A CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 200/CHD/2018 ASSESSMENT YEAR : 2013-14 M/S CAPRI DEVELOPERS PRIVATE LIMITED., VS. THE ACIT , CIRCLE 4(1), SCO 140-141, SECTOR 34-A, CHANDIGARH CHANDIGARH PAN NO. AAECC6479J (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUDHUIR SEHGAL, ADVOC ATE RESPONDENT BY : SH. MANJIT SINGH, SR.DR DATE OF HEARING : 22.05.2018 DATE OF PRONOUNCEMENT : 14. 08. 2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 19.12.2017 OF THE COMMISSIONER OF I NCOME TAX(A)-2, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)] AG ITATING THE CONFIRMATION OF PENALTY LEVIED BY THE ASSESSING OF FICER U/S 271(1)(C) OF THE ACT 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING O FFICER LEVIED THE IMPUGNED PENALTY OBSERVING THAT THE ASSESSEE HAD WRONGLY CLAIMED DEDUCTION OF INTEREST U/S 24(B) OF THE INCOME-TAX A CT, 1961 (IN SHORT 'THE ACT'). HE OBSERVED THAT DEDUCTION U/S 24(B) O F THE ACT WAS ALLOWABLE RELATING TO THE INTEREST EXPENDITURE INCU RRED ON THE AMOUNT ITA NO. 200/CHD/2018- M/S CAPRI DEVELOPERS PVT LTD, CHANDIGARH 2 BORROWED FOR CONSTRUCTION / REPAIRS ETC. OF THE PRO PERTY, INCOME FROM WHICH IS ASSESSABLE UNDER THE HEAD INCOME FROM HOU SE PROPERTY. HOWEVER, THE ASSESSEE COMPANY IN THIS CASE WAS INVO LVED IN THE BUSINESS OF REAL ESTATE. THE RENTAL INCOME WAS RETU RNED AS THE MAIN BUSINESS INCOME AND, HENCE, THE LOAN TAKEN WAS FOR BUSINESS PURPOSES. HE, THEREFORE, DENIED THE DEDUCTION U/S 2 4(B) OF THE ACT AND SIMULTANEOUSLY INITIATED PENALTY PROCEEDINGS U/ S 271(1)(C) OF THE ACT AND LEVIED THE IMPUGNED PENALTY, WHICH HAS BEEN FURTHER CONFIRMED BY THE LD. CIT(A). 3. BEFORE US, THE LD. COUNSEL HAS SUBMITTED THAT EV EN IF IT IS ASSUMED THAT THE EARNING OF RENTAL INCOME WAS THE B USINESS INCOME OF THE ASSESSEE EVEN THEN THE INTEREST EXPENDITURE IN CURRED BY THE ASSESSEE IN RELATION TO THE EARNING OF THE RENTAL I NCOME WAS OTHERWISE ALLOWABLE AS AN EXPENDITURE U/S 36(I)(I II) OF THE ACT. HE HAS FURTHER SUBMITTED THAT THOUGH THE CLAIM OF THE ASSESSEE OF THE DEDUCTION U/S 24(B) OF THE ACT WAS DENIED BY THE AU THORITIES IN QUANTUM ASSESSMENT PROCEEDINGS, HOWEVER, IT WAS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR C ONCEALMENT OF INCOME. THAT THE ASSESSEE UNDER BONAFIDE BELIEF WRO NGLY CLAIMED DEDUCTION U/S 24(B) WHEREAS THE ASSESSEE OTHERWISE WAS ENTITLED TO CLAIM DEDUCTION AS BUSINESS EXPENDITURE. 4. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE OR DERS OF THE LOWER AUTHORITIES. 5. CONSIDERING THE ABOVE SUBMISSIONS OF THE LD. COU NSEL FOR THE ASSESSEE, WE FIND THAT IT IS NOT A FIT CASE FOR LEV Y OF PENALTY U/S ITA NO. 200/CHD/2018- M/S CAPRI DEVELOPERS PVT LTD, CHANDIGARH 3 271(1)(C) OF THE ACT. THEREFORE, THE PENALTY IMPOS ED BY THE LOWER AUTHORITIES IS HEREBY ORDERED TO BE DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.8.2018 SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 14. 08.2018 RKK COPY TO: THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) THE DR