Dr.V.S.Vijay, Vellore V. ITO, Vellore

ITA 274/CHNY/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 4465 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 05-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: K NIRAIMATHI AZHAGAN
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER A ND SHRI GEORGE MATHAN, JUDICIAL MEMBER) .. I.T.A. NO. 274/MDS/2010 ASSESSMENT YEAR :2004-05 DR. V.S. VIJAY, 15, THIYAGARAJAPURAM, VELLORE. PAN : AACPV1579R (APPELLANT) V. THE INCOME-TAX OFFICER, WARD-I(1), VELLORE. (RESPONDENT) APPELLANT BY : SHRI K. NIRAIMATHI AZHAGAN RESPONDENT BY : SHRI B. SRINIVAS O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A PPEALS)-IX, CHENNAI IN APPEAL NO. ITA NO. 40/08-09 DATED 11-12-2009 FOR THE ASSES SMENT YEAR 2004-05. 2. SHRI K. NIRAIMATHI AZHAGAN, CA REPRESENTED ON BE HALF OF THE ASSESSEE AND SHRI B. SRINIVAS, DR REPRESENTED ON BEHALF OF THE REVENUE. 3. IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRE SENTATIVE THAT THE ASSESSEE IS A DOCTOR WHO OWNED A HOUSE PROPERTY AT SITE NO.15, THIAGARAJAPURAM, VELLORE. THE ASSESSEE WAS ALSO HA VING A CLINIC IN THE SAME SITE, BUT IN A SEPARATE BUILDING. DURING THE RELEVA NT ASSESSMENT YEAR THE ASSESSEE HAD PURCHASED THE ADJACENT SITE BEING SITE NO.16 BY AVAILING BANK LOAN. ITA NO. 274/MDS/2010 2 THE ASSESSEE HAD BEEN USING THE ADJACENT SITE AS A PARKING SPACE, GARDEN AS ALSO FOR BETTER VENTILATION FOR HIS RESIDENTIAL HOU SE. THE SAID SITE BEING APPURTENANT TO HIS RESIDENTIAL HOUSE, THE ASSESSEE HAD CLAIMED THE INTEREST PAYMENT IN RESPECT OF THE LOAN TAKEN FOR THE SAID S ITE NO.16 AS EXEMPT U/S. 24(B) OF THE INCOME-TAX ACT, 1961. THE RETURN FILED BY T HE ASSESSEE HAD BEEN ACCEPTED AND AN INTIMATION ISSUED. SUBSEQUENTLY, T HE AO HAD INVOKED THE PROVISIONS OF SECTION 154 AND HAD RECTIFIED THE INT IMATION BY HOLDING THAT THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF EXEMPTION U/S. 24(B) IN RESPECT OF THE INTEREST PAID ON THE LOAN TAKEN FOR ACQUIRING THE A PPURTENANT LAND BEING SITE NO.16, THIAGARAJAPURAM, VELLORE. IT WAS THE SUBMIS SION THAT BEFORE THE LEARNED CIT(A) A REMAND REPORT HAD BEEN CALLED FOR AS ALSO THE INSPECTORS REPORT AND THE INSPECTOR AFTER VERIFICATION HAD SPECIFICALLY A DMITTED THAT THE SITE WAS BEING USED FOR PARKING THE CAR OF THE ASSESSEE AND THAT T HE ENTIRE SITE WAS FULL OF BUSHES AND DEBRIS. THE ASSESSEE ALSO PLACED BEFORE US THE COPY OF THE PHOTOGRAPH OF THE SAID SITE ALONG WITH THE HOUSE. THE ASSESSEE HAS ALSO PLACED BEFORE US A COPY OF THE DRAWING OF THE PLAN SHOWING THE LOCATION OF THE CLINIC, THE HOUSE AND THE VACANT SITE WHICH WAS PURCHASED AND M ADE APPURTENANT TO THE HOUSE. IT WAS THE SUBMISSION THAT THE INCOME FROM HOUSE PROPERTY AS PER THE PROVISIONS OF SECTION 22 OF THE INCOME-TAX ACT, 196 1 MEANT THE ANNUAL VALUE OF THE PROPERTY CONSISTING OF ANY BUILDINGS OR LANDS A PPURTENANT THERETO OF WHICH THE ASSESSEE IS THE OWNER. IT WAS THE SUBMISSION T HAT THE WORD USED IS OR AND ITA NO. 274/MDS/2010 3 NOT AND. IT WAS THE FURTHER SUBMISSION THAT WHEN COMPUTING THE DEDUCTION FROM THE INCOME CHARGEABLE UNDER THE HEAD INCOME F ROM HOUSE PROPERTY, WHEN THE ANNUAL VALUE OF THE PROPERTY IS COMPUTED A ND SUCH PROPERTY HAS BEEN ACQUIRED WITH BORROWED CAPITAL, THE INTEREST PAYABL E ON THE CAPITAL WAS AN ALLOWABLE DEDUCTION. IT WAS THE SUBMISSION THAT UN DISPUTABLY THE SITE NO.16 WAS LAND APPURTENANT TO THE ASSESSEES RESIDENTIAL HOUS E. ADMITTEDLY, THE SITE WAS BEING USED BY THE ASSESSEE FOR PARKING HIS CAR AND AS THE LAND WAS APPURTENANT TO HIS RESIDENTIAL HOUSE AS WAS EVIDENT FROM THE RE PORT OF THE INSPECTOR AS ALSO THE PHOTOGRAPH AND THE SITE PLAN AND AS THE SITE NO .16 WAS PURCHASED WITH BORROWED CAPITAL, THE ASSESSEE WAS ENTITLED TO THE CLAIM OF DEDUCTION U/S. 24(B) OF THE ACT. IT WAS THE FURTHER SUBMISSION THAT THE PROVISIONS OF SECTION 154 COULD NOT BE INVOKED INSOFAR AS THERE WAS NO MISTAKE APPA RENT FROM THE RECORD AND THE ISSUE IF AT ALL WAS HIGHLY DEBATABLE ISSUE INSO FAR AS THE REMAND REPORT HAD TO BE CALLED FOR IN RESPECT OF THE ISSUE AS ALSO A REP ORT FROM THE INSPECTOR AFTER SPECIFIC SITE VISIT. THUS IT COULD NOT BE SAID THA T THE MISTAKE WAS APPARENT FROM RECORD WHICH COULD BE RECTIFIED BY INVOKING THE PRO VISIONS OF SECTION 154 OF THE ACT. 4. IN REPLY THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AO AND THE LD. CIT(A). IT WAS THE SUBMISSION THAT THE SIT E PURCHASED WAS A VACANT LAND. IT WAS THE SUBMISSION THAT THE ASSESSEE WAS NOT ENT ITLED TO THE CLAIM OF DEDUCTION U/S. 24(B) OF THE ACT. IT WAS ALSO THE S UBMISSION THAT THE ISSUE OF THE ITA NO. 274/MDS/2010 4 DEBATABLE NATURE OF THE DISALLOWANCE WAS NOT RAISED IN THE APPEAL OR BEFORE THE CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT TH E OUT SET IT IS NOTICED THAT AS PER SECTION 22 THE ANNUAL VALUE IS OF THE BUILDI NGS OR LANDS APPURTENANT TO THE BUILDING. IT IS NOTICED THAT THE SITE NO.16 IS LAN D APPURTENANT TO THE RESIDENTIAL HOUSE OF THE ASSESSEE WHICH IS ALSO EVIDENT FROM TH E PLAN AS ALSO THE PHOTOGRAPHS. EVEN THE INSPECTORS SITE VISIT CLEARL Y SHOWS THAT THE VACANT SITE IS ADJACENT TO THE RESIDENCE OF THE ASSESSEE AND THE V ACANT SITE HAS ONE CAR SHED WHICH IS USED BY THE ASSESSEE TO PARK HIS CAR DURIN G NIGHT. THIS CLEARLY SHOWS THAT THE SITE IS BEING USED AS LAND APPURTENANT TO THE RESIDENTIAL HOUSE OF THE ASSESSEE INSOFAR AS THE PARKING OF THE CAR DURING N IGHT WOULD BE AT THE RESIDENCE OF THE ASSESSEE ONLY. ONCE IT IS HELD THAT THE SIT E NO.16 PURCHASED BY THE ASSESSEE IS LAND APPURTENANT TO THE RESIDENCE, THEN AS PER THE PROVISIONS OF SECTION 24(B) OF THE ACT, AS THE LAND APPURTENANT T O THE RESIDENCE HAS BEEN ACQUIRED WITH BORROWED CAPITAL, THE INTEREST ON THE CAPITAL IS AN ALLOWABLE DEDUCTION. IN THE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE CLAIM OF THE ASSESSEE IS WRONG. THEREFORE, THE AO IS DIRECTED TO GRANT T HE ASSESSEE THE CLAIM OF DEDUCTION U/S. 24(B) OF THE ACT TO THE EXTENT OF RS . 71,355/- AS CLAIMED. 6. IN RESPECT OF THE ISSUE OF THE DEBATABLE NATURE OF THE ALLOWANCE IT IS NOTICED THAT THE QUESTION OF THE DEBATABLE NATURE I S A LEGAL ISSUE WHICH CAN BE RAISED IN ARGUMENTS. IT IS NOTICED THAT THE FACT T HAT THE INSPECTOR HAD TO BE SENT ITA NO. 274/MDS/2010 5 FOR VERIFICATION AND THE INSPECTOR IN HIS REPORT HA S ALSO CONFIRMED THE CLAIM OF THE ASSESSEE THAT THE SITE HAS BEEN USED AS LAND APPURT ENANT TO THE RESIDENCE SHOWS THAT THERE IS A DEBATE BETWEEN THE CLAIM OF THE AO AND THE REPORT OF THE INSPECTOR. WHERE THERE IS A DEBATE ON THE ISSUE IT CANNOT BE SAID THAT IT IS A MISTAKE APPARENT FROM RECORD, ESPECIALLY WHEN THE I NSPECTORS REPORT HAS CLEARLY SHOWN THAT THE SITE NO.16 IS LAND APPURTENANT TO TH E RESIDENCE OF THE HOUSE AND IS BEING USED BY THE ASSESSEE. IN THE CIRCUMSTANCE S, WE ARE OF THE VIEW THAT THE ISSUE AS RECTIFIED BY THE AO IS A DEBATABLE ISSUE A ND WHICH CANNOT BE DONE U/S. 154. IN THE CIRCUMSTANCES, ON THIS GROUND ALSO THE ORDERS OF THE LD. CIT(A) AND THAT OF THE AO STAND REVERSED. ACCORDINGLY, THE APP EAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. 8. THE ORDER WAS PRONOUNCED IN THE COURT ON 23-07-2 010. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 23 RD JULY, 2010. H. COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/D.R./GUA RD FILE