The ACIT, Circle-11, Ahmedabad V. Shri Mahendra R.Gandhi, Ahmedabad

ITA 2300/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85805 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 12-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Section: 143(3)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO.2300/AHD/2011 / ASSTT. YEAR: 2008-09 ACIT, CIR.11 AHMEDABAD. VS SHRI MAHENDRA R. GANDHI 41, JAIN SOCIETY, PALDI AHMEDABAD. PAN : ACEPM 6168 R ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI M.K. SINGH, SR.DR ASSESSEE(S) BY : SHRI BHARAT SHAH / DATE OF HEARING : 02/03/2015 / DATE OF PRONOUNCEMENT: 13/03/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS AN APPEAL FILED BY THE REVENUE AGAINST ORDER OF THE CIT(A)-XVI, AHMEDA BAD DATED 4.7.2011 FOR ASSTT.YEAR 2008-09. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE CIT(A) ERRED IN DELETING RS.24,05,179/- ON ACCOUNT OF DISALLOWANCE UNDER SECTION 24(B) OF THE ACT MADE BY THE AO. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CL AIMED INTEREST EXPENDITURE OF RS.21,26,924/- UNDER SECTION 24(B) O F THE ACT BEING THE INTEREST PAID ON BORROWED CAPITAL. ON GOING THROUG H THE INTEREST ACCOUNT SUBMITTED BY THE ASSESSEE, THE AO OBSERVED THAT THE ASSESSEE HAS SHOWN WRONG FIGURE OF DEDUCTION AS THE FIGURE A RRIVED AT AFTER NETTING INTEREST INCOME AND EXPENDITURE. ACCORDING TO THE AO AS PER THE COPY OF THE ACCOUNT FILED BY THE ASSESSEE, IT W AS SEEN THAT THE ITA NO.2300/AHD/2011 2 ASSESSEE HAD MADE INTEREST PAYMENT OF RS.24,05,179/ - TO VARIOUS PERSONS. MOST PAYMENTS WERE MADE TO THE PERSONS FR OM WHOM THE ASSESSEE HAS TAKEN UNSECURED LOAN. THE AO OBSERVED THAT THE ASSESSEE HAS EARNED INTEREST INCOME OF RS.2,78,254/- FROM VA RIOUS PERSONS. THUS, THE NET INTEREST EXPENSES WAS RS.21,26,924/-, AND HENCE THE REAL CLAIM WAS FOR RS.24,05,179/- AND NOT FOR RS.21,26,9 24/- AS CLAIMED AND REPORTED BY THE ASSESSEE. ACCORDING TO THE AO, THE ASSESSEE FAILED TO PRODUCE EVEN A SINGLE EVIDENCE TO PROVE THAT HOUSE PROPERTY WAS ACQUIRED, CONSTRUCTED, REPAIRED AND RENEWED OR RECO NSTRUCTED WITH BORROWED CAPITAL ON WHICH INTEREST WAS PAID AND CLA IMED AS DEDUCTION, THEREFORE, HE DISALLOWED DEDUCTION FOR EXPENDITURE OF RS.24,05,179/-. 4. ON APPEAL, THE CIT(A) HELD THAT IT WAS SURPRISIN G THAT AT ONE PLACE THE AO WAS ACCEPTING THE COST OF CONSTRUCTION AND T HE INTEREST CAPITALIZED AND ON THE OTHER HAND DENIED ABOUT ANY EVIDENCE WHICH MAY GO TO PROVE THAT THE HOUSE PROPERTY HAS BEEN AC QUIRED, CONSTRUCTED, REPAIRED , RENEWED OR RECONSTRUCTED WI TH BORROWED CAPITAL, ON WHICH THE INTEREST HAS BEEN PAID AND CLAIMED AS DEDUCTION. HE OBSERVED THAT THE ASSESSEE HAD MADE THE INVESTMENT IN PROPERTY CONSTRUCTION OF RS.1,89,77,628/- IN A.Y.2006-07 AND RS.2,04,86,440/- IN A.Y.2007-08 INCLUSIVE OF CAPITALIZATION OF INTER EST OF RS.15,30,210/- IN A.Y.2006-07 AND RS.10,06,049/- IN A.Y.2007-08. THE CIT(A) OBSERVED THAT THUS, THE INTEREST OF RS.25,36,259/- PAID ON B ORROWED CAPITAL AND CAPITALIZED HAS NEVER BEEN DISPUTED BY THE AO IN TH E PRECEDING YEARS. HE OBSERVED THAT NO FRESH INVESTMENT WAS MADE IN TH E PROPERTY AS THE SAME WAS STATED TO BE COMPLETED IN JANUARY, 2007. HE FURTHER OBSERVED THAT THE INTEREST CLAIMED UNDER SECTION 24 (B) OF THE ACT WAS FOR THE SAME BORROWED CAPITAL REMAINED AFTER REPAYM ENT. IF NO OBJECTION WAS RAISED FOR THE BORROWED CAPITAL USED IN CONSTRUCTION IN THE PRECEDING YEAR, THE SAME COULD NOT BE DISPUTED DURI NG THE YEAR UNDER CONSIDERATION WHERE NO CAPITAL WAS BORROWED FOR CON STRUCTION. THE CIT(A) OBSERVED THAT APART FROM IT, THE DETAILS AND THE ORDER OF THE ITA NO.2300/AHD/2011 3 EARLIER YEARS I.E. A.Y.2007-08 PASSED U/S.147 READ WITH SECTION 143(3) OF THE ACT WAS ALREADY AVAILABLE IN THE FILE OF THE AO FOR SATISFYING THE DETAILS AND THE CONDITIONS LAID DOWN UNDER SECTION 24(B) OF THE ACT. HE OBSERVED THAT OBJECTION RAISED BY THE AO WAS THUS T OTALLY IRRELEVANT AND THE SAME WAS REJECTED AND THE CLAIM OF DEDUCTION OF INTEREST OF RS.24,05,179/- WAS ALLOWED AND ADDITION SO MADE WAS DELETED. 5. BEFORE US, THE DR MERELY RELIED ON THE ORDER OF THE AO. THE DR COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE CIT(A). NO MATERIAL WAS BROUGHT BEFORE US TO SHOW THAT BORROWE D FUNDS ON WHICH INTEREST WAS PAID WAS NOT UTILIZED FOR INVESTMENT I N HOUSE PROPERTY, WHEN THE INTEREST EXPENDITURE ON THE SAME BORROWED FUNDS WAS ALLOWED AS DEDUCTION TO THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. WE, THEREFORE, DO NOT FIND ANY GOOD REA SON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS CONFIRMED AND THE GROUND OF THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 13 TH MARCH, 2015 AT AHMEDABAD. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER