Shri Kalpeshbhai Kantibhai Patel, Surat V. The ACIT.,Circle-2, Surat

ITA 2008/AHD/2009

• Counselvise Citation: 200820514 RSA 2009
• Duration Of Justice: 2 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 19-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: J P SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI A K GARODIA ACCOUNTANT MEMBER AND SHRI KUL BHARAT JUDICIAL MEMBER ITA NO.2008/AHD/2009 (ASSESSMENT YEAR:-2006-07) SHRI KALPESH KANTILAL PATEL, TAMANNA BUNGLOW, MAHADEV NAGAR, SAGRAMPURA, SURAT V/S THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-2, SURAT PAN: ABCPP 9335 L [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI J P SHAH, AR REVENUE BY:- SHRI B L YADAV, SR. DR DATE OF HEARING:- 22-03-2012 DATE OF PRONOUNCEMENT:- 13-04-2012 O R D E R PER KUL BHARAT (JM) :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST AN ORDER DATED 31-03-2009 PASSED B Y THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-II, [HEREINAFT ER REFERRED TO AS THE LEARNED CIT(A)] SURAT FOR ASSESSMENT YE AR (AY) 2006-07. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL READ AS UNDER:- 1. THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.1,07,646/- U/S 24 OF THE ACT WITHOUT APPRECIATING THE PROVISIONS OF LAW WHICH ENTITLES T HE DEDUCTION ON SERVICE CHARGE RECEIPTS. THE ADDITION SHOULD BE DEL ETED. 2. THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.2,01,824/- U/S 24 OF THE ACT WITHOUT APPRECIATING THE FACTS THAT INTEREST ON BANK LOAN O BTAINED FOR PURCHASE 2 2 OF PROPERTY LET OUT IS ELIGIBLE FOR DEDUCTION. THE ADDITION OF RS.2,01,824/- SHOULD BE DELETED. 2 THE BRIEF FACTS OF THE CASE IN RESPECT OF GROUND NO.1, AS EMERGED FROM THE ORDER OF THE LEARNED CIT(A) ARE AL MOST SIMILAR. IN THIS CASE, THE DISALLOWANCE WAS ONLY TO THE EXTE NT OF RS.71,946/- IN RESPECT OF THE SERVICE CHARGES RECEI VED FROM ABN AMRO BANK AND OF RS.29,700/- FROM THE KARNATAKA BAN K, WHICH TOTALED RS.1,01,646/-. THE LEARNED CIT(A) CONFIRMED THE ADDITION BY FOLLOWING HIS ORDER IN ASSESSEES APPEAL FOR THE AY 2005-06 WHEREIN HE HAS TAKEN THE VIEW THAT DEDUCTION U/S 24 OF THE ACT WAS NOT ADMISSIBLE ON THE SERVICE CHARGES RECEIVED BY THE ASSESSEE FROM THE TENANTS OF SEVERAL PROPERTIES. 3 AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE U S. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED THEIR RI VAL SUBMISSIONS. WE HAVE DECIDED SIMILAR ISSUE IN THE C ASE OF SMT. CHANCHALBEN K PATEL IN ITA NO.68/AHD/2009 FOR AY 20 05-06. THE RELEVANT OBSERVATION OF THE SAID ORDER IS REPRO DUCED HEREINBELOW:- 4 AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE INVOLVED IS DISALLOWANCE OF RS.1,23,538/- MAD E BY THE AO BEING NOT ELIGIBLE FOR DEDUCTION U/S 24 OF THE A CT. ADMITTEDLY IN THIS CASE THE AGREEMENT EXECUTED WITH ABN AMRO BANK AND KARNATAKA BANK BY THE ASSESSEE IT IS CONTEMPLATED THAT THE LESSEE WILL PAY A SUM OF RS.1 1000/- P.M. AS SERVICE CHARGES AND RENT OF RS.9000/-. THE LEARNED AR SUBMITTED THAT THE SERVICE CHARGES IS NOTHING BU T THE RENTAL INCOME AND IN SUBSTANCE THE SAME MAY BE TREA TED AS INCOME FROM THE HOUSE PROPERTY. WE HAVE GIVEN OUR 3 3 THOUGHTFUL CONSIDERATION TO THE SUBMISSIONS MADE BY THE LEARNED AR. WE ARE NOT INCLINED TO ACCEPT THE CONTE NTION OF THE LEARNED AR SINCE THE AMOUNT RECEIVED ON ACCOUNT OF SERVICE CHARGES FALLS UNDER THE HEAD INCOME FROM O THER SOURCES. THE SCHEME OF THE ACT CONTEMPLATES DIFFE RENT HEADS OF INCOME. THEREFORE, INCOME SPECIFIED UNDER ONE HEAD CANNOT BE TREATED INCOME OF ANOTHER HEAD. THE INCOME RECEIVED AS SERVICE CHARGES CAN NOT BE TREATED AS I NCOME FROM HOUSE PROPERTY AS SUCH SAME IS NOT PERMISSIBLE UNDER LAW. SINCE THE SERVICE CHARGES ARE NOT INCOME FROM HOUSE PROPERTY, ON SUCH AMOUNT DEDUCTION PRESCRIBED U/S 2 4 OF THE ACT WOULD NOT BE AVAILABLE. IN VIEW OF THIS MATTER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) A ND THE SAME IS HEREBY UPHELD. FOLLOWING THE AFORESAID ORDER, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND GROUND NO.1 RAISED BY THE ASSESSEE IS DISMISSED. 4 AS REGARDS GROUND NO.2 IN THE APPEAL, THE FACTS O F THE CASE ARE THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 24 OF THE ACT ON THE INTEREST PAID TO THE BANK OF THE SUM OF RS.2,01 ,824/- AGAINST THE LOAN TAKEN FOR THE PURCHASE OF HOUSE PROPERTY, THE BREAK-UP OF WHICH IS GIVEN IN THE ORDER OF THE LEARNED CIT(A). THE LEARNED CIT(A) HAS DEALT WITH THE ISSUE IN DETAIL AND HELD THAT THE CLAIM CANNOT BE ALLOWED. RELEVANT OBSERVATION OF THE LEAR NED CIT(A) IS AS UNDER:- THE AR HAS FURNISHED A COPY OF THE COMPUTATION OF INCOME FOR THE YEAR UNDER CONSIDERATION WHICH ALLEGEDLY WAS FURNIS HED ALONG WITH THE RETURN OF INCOME. FIRSTLY, THE AO WILL HAVE TO VERI FY WHETHER ANY CLAIM OF DEDUCTION WAS MADE IN ASST. PROCEEDINGS OF THE SUM OF RS.2,01,824, U/S.24 OF THE IT ACT. SECONDLY, EVEN T HOUGH THE INTEREST ON CAPITAL BORROWED FOR THE ACQUISITION, CONSTRUCTI ON, REPAIR OF BUILDING IS ALLOWABLE AS DEDUCTION UNDER THE PROVIS IONS OF SEC.24(B) YET, THE BREAK-UP PROVIDED BY THE AR AS ABOVE SHOWS THAT THE ENTIRE 4 4 SUM OF RS.2,01,824 COULD NOT HAVE BEEN ALLOWED AS D EDUCTION UNDER THE SAID SECTION. ADVOCATE FEES (RS.5,000), ACCOUNT ANT'S FEES (RS.9,000), PROPERTY INSURANCE (RS.50,306) AND OTHER INTEREST PAYMENTS (RS.91,476) ARE NOT COVERED U/S.24 (B) OF THE ACT. AS REGARD'S INTEREST TO BANK-(RS.29,215) AND BANK I NTEREST (RS.16,827), IT IS NOT ESTABLISHED AS TO THE PURPOSE FOR WHICH S UCH INTEREST WAS PAID TO THE BANK AND WHAT IS THE DIFFERENCE BETWEEN THE TWO SUMS OF RS.29,215 AND RS.16,827. IT HAS ALSO NOT BEEN SHOWN THAT SUCH INTEREST PAYMENTS WERE RELATABLE TO THE FUNDS BORROWED FOR T HE PURPOSES AS LAID DOWN IN SEC.24(B). THEREFORE, THE ASSESSEE'S CLAIM FOR DEDUCTION OF THE SUM OF RS.2,01,824 UNDER THE PROVISIONS OF SEC. 24 OF THE IT ACT IS NOT ACCEPTABLE. HOWEVER, BEFORE CONSIDERING THE ALL OWABILITY OF THE SAID SUM AS A DEDUCTION U/S.24, THE AO IS DIRECTED TO FIRST VERIFY AS TO WHETHER OR NOT SUCH A CLAIM WAS AT ALL MADE IN ASST . PROCEEDINGS AND, IF NO SUCH CLAIM WAS MADE, THE CLAIM NOW MADE CANNO T BE ALLOWED. 5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE INTE REST IS NOT ALLOWABLE SINCE THE ASSESSEE COULD NOT ESTABLISH TH AT THE INTEREST PAID WAS ON ACCOUNT OF BORROWED CAPITAL FOR THE HOU SE PROPERTY. IN THE ABSENCE OF THE SAME, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF THE LEARNED CIT(A) AND THE SAME IS HEREBY UPHELD. THIS GROUND RAISED BY THE ASSESSEE ALSO STANDS DISMISSED . 6 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 13-04-2012 SD/- SD/- (A K GARODIA) ACCOUNTANT MEMBER (KUL BHARAT) JUDICIAL MEMBER DATE : 13-04-2012 5 5 COPY OF THE ORDER FORWARDED TO: 1. SHRI KALPESH KANTILAL PATEL, TAMANNA BUNGLOW, MAHADEV NAGAR, SAGRAMPURA, SURAT 2. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-2, SURAT 3. CIT CONCERNED 4. CIT(A)-II, SURAT 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD