CRIMSON PROPERTY P. LTD, MUMBAI V. ITO 5(1)(3), MUMBAI

ITA 2791/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8472 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 23-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Source of fund; Additional evidence; Question of law
• Section: 43B; 143(3); 145

Judgement Text

ITA NO.2 792 & 3107/M/2014 CRIMSO N PROPERTY P. LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C, MU MBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2791/MUM/2014 FOR A Y : 2009-10 CRIMSON PROPERTY P. LTD, 3 RD FLOOR , SUNAMA HOUSE, KEMPS CORNER, OPP. SHALIMAR HOTEL, MUMBAI -36 PAN : AAACC2206R VS. INCOME TAX OFFICER, WARD 5(1), R. NO. 569, 5 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 (APPELLANT) (RESPONDENT) ITA NO.3107/MUM/2014 FOR A Y: 2009-10 INCOME TAX OFFICER, WARD 5(1), R. NO. 569, 5 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 VS. CRIMSON PROPERTY P. LTD, 3 RD FLOOR , SUNAMA HOUSE, KEMPS CORNER, OPP. SHALIMAR HOTEL, MUMBAI -36 PAN : AAACC2206R (APPELLANT) (RESPONDENT) ASSESSEE BY DR. K.SHIVRAM SR ADVOCATE WITH SH. ADITYA AJGOANKAR ADVOCATE REVENUE BY SH. MAURYA PRATAP - DR DATE OF HEARING 17.11.2016 DATE OF PRONOUNCEMENT 01.02.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH JUDICIAL MEMBER; 1. THESE CROSS TWO APPEALS UNDER SECTION 253 OF INCOME TAX ACT (ACT) ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER (APPEALS )-29, MUMBAI, DATED 24.02.2014 FOR AY: 2009-10. AS BOTH THE APPEALS A RE ARISING OUT OF THE SAME ORDER, THUS BOTH THE APPEALS WERE CLUBBED TOGETHER, HEARD AND BEING DECIDED BY COMMON ORDER TO AVOID THE CONFLICTING DECISION. ITA NO.2 792 & 3107/M/2014 CRIMSO N PROPERTY P. LTD 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY IS ENGAGED IN THE BUSINESS OF LETTING OUT OF IMMOVABLE PROPERTIES. TH E ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 29 SEPTEMBER 2009. THE A SSESSMENT U/S 143(3) WAS COMPLETED ON 5 DECEMBER 2011.THE AO WHILE FRAMING A SSESSMENT ORDER MADE ADDITION OF RS. 15,40,429/- ON ACCOUNT OF SERVICE T AX HOLDING THAT IT WAS COLLECTED BUT NOT PAID, DISALLOWED THE CLAIM UNDER SECTION 24(B) OF RS. 60,34,149/- (OUT OF RS. 89,25318/-) HOLDING THAT T HE ASSESSEE FAILED TO PROVE THE NEXUS OF DISBURSEMENT OF LOAN FROM DIWAN HOUSING FI NANCE LTD (DHFL). 3. ON APPEAL BEFORE THE COMMISSIONER (APPEALS) THE ADD ITION OF RS. 15,40,429/-ON ACCOUNT OF SERVICE TAX WAS UPHELD. HOWEVER, IN R ESPECT OF CLAIM OF INTEREST EXPENSES THE ASSESSEE FILED ADDITIONAL EVIDENCE AND RAISED ADDITIONAL GROUND FOR CLAIMING INTEREST EXPENSES IN RESPECT OF DHANWATAY PROPERTY (OTHER THAN THE PROPERTY FOR WHICH IT WAS CLAIMED BEFORE AO). THE L D CIT (A) FORWARDED TO THE ADDITIONAL EVIDENCE TO AO FOR HIS COMMENT. THE AO V IDE HIS REPLY DATED 08/02/2013OBJECTED FOR RAISING THE ADDITIONAL GROUN D FOR ALLOWING THE INTEREST U/S 24(B) IN RESPECT OF THE DIFFERENT PROPERTY FOR WHIC H NO SUCH CLAIM WAS MADE DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSEE NOT CLAIMED SUCH INTEREST EXPENSES IN RESPECT OF DHANWATAY PROPERTY. AFTER CO NSIDERING THE CONTENTION OF ASSESSEE THE LD CIT(A) ADMITTED THE ADDITIONAL GROU ND OF APPEAL AND THE ADDITIONAL EVIDENCE. AFTER CONSIDERING THE REMAND R EPORT OF AO, THE LD CIT(A) DIRECTED AO TO VERIFY THE CONTENTION OF THE ASSESSE E IF THE BORROWED FUNDS WERE USED TO ACQUIRE THE DHANWATAY PROPERTY AND GRANT T HE RELIEF TO THE ASSESSEE. THUS, CONSEQUENTLY ALLOWED THE PART RELIEF TO THE A SSESSEE. AGGRIEVED, BY THE ORDER OF LD COMMISSIONER (APPEALS) BOTH THE PARTY F ILED THEIR CROSS APPEAL BEFORE THIS TRIBUNAL. THE ASSESSEE HAS CHALLENGED T HE CONFIRMATION OF ADDITION ON ACCOUNT OF SERVICE TAX COLLECTED AS NOT PAID AND TH E DISALLOWANCE UNDER SECTION 24(B) RS. 60,34,149/- THE REVENUE HAS CHALLENGED T HE ADMISSION OF ADDITIONAL GROUND OF APPEAL, ADDITIONAL EVIDENCE AND THE DIRE CTION OF LD CIT(A) TO ASSESS THE RENTAL INCOME FROM DHANWATAY HOUSE AND TO ALLOW INTEREST AGAINST THE RENT. 4. FIRST WE ARE TAKING THE APPEAL FILED BY ASSESSEE. T HE ASSESSEE IN ITS APPEAL ITA NO. 2791/M/2014 HAS RAISED FOLLOWING GROUNDS OF AP PEAL: ITA NO.2 792 & 3107/M/2014 CRIMSO N PROPERTY P. LTD 3 (I) THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF R S. 15,40,429/- TO THE RENTAL INCOME OF THE APPELLANT ON ACCOUNT OF SERVICE AT CO LLECTED BUT NOT PAID. (II) THE LD CIT (A) ERRED IN LAW IN RESENDING THE MATTER BACK TO THE AO FOR CALCULATION OF INTEREST. (III) THE LD CIT(A) ERRED IN LAW AND ON THE FACTS IN NOT ALLOWING THE CLAIM OF INTEREST UNDER SECTION 24(B) AMOUNTING TO RS. 60,34,149/- AC QUISITION OF THE APPLY HOUSE AND THEN WANT THE HOUSE FROM WHICH THE ASSESSEE AND INTEREST. 5. WE HAVE HEARD THE LD AR FOR THE ASSESSEE AND THE LD DR FOR THE REVENUE AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D THE DOCUMENTS FILED ON RECORD. FIRST GROUND OF APPEAL RELATES TO THE ADDIT ION OF RS 15,40,429/-ON ACCOUNT OF SERVICE TAX HOLDING THAT IT WAS COLLECTED BUT NO T PAID. THE LD AR FOR THE ASSESSEE ARGUED THAT THE ASSESSEE RECEIVED SERVICE TAX OF RS. 15,40,429/- WHICH HAD NOT BEEN PAID TO THE GOVERNMENT TILL 31/03/2009 . THE PROVISION OF SECTION 43B IS NOT APPLICABLE TO THE ASSESSEE AS THERE WAS NO BUSINESS INCOME. THE SERVICE TAX WAS NOT PAID AS THERE WAS STAY FROM THE BOMBAY HIGH COURT. THE ASSESSEE HAS NOT CREDITED IT TO THE P/L ACCOUNT NOR CLAIMED EXPENDITURE. THE LD AR FOR THE ASSESSEE RELIED ON THE DECISION OF MUMBA I TRIBUNAL IN PHARMA SEARCH VS ACIT [2012] 21TAXMAN.COM 44(MUM) AND DECISION OF BOMBAY HIGH COURT IN CIT VS KNIGHT FRANK (INDIA) IN ITA NO. 247 OF 20 14 DATED 16.08.2016. ON THE OTHER HAND THE LD DR FOR THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND ARGUED THAT THE ASSESSEE DESPITE COLLECTI NG THE SERVICE TAX NEITHER DEPOSITED WITH THE GOVERNMENT NOR REFUNDED IT TO TH E PARTIES FROM WHOM IT WAS COLLECTED. 6. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES. DURING THE ASSESSMENT THE AO NOTICED THAT THE ASSESSEE RECEIVED THE SERVI CE TAX OF RS. 15,40,429/- OVER AND ABOVE THE RENTAL INCOME. THE ASSESSEE NOT DEPOS ITED THE SERVICE TAX WITH THE GOVERNMENT NOR REFUNDED TO THE PERSONS FROM WHO M IT WAS COLLECTED. THE ASSESSEE CONTENDED THAT THE PROVISION OF SECTION 43 B IS NOT APPLICABLE TO THE ASSESSEE AS THE ASSESSEE HAS NO BUSINESS INCOME. TH E CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY AO AND ADDED THE SAME IN THE IN COME OF THE ASSESSEE. THE LD CIT(A) HAS NOT GIVEN ANY DIFFERENT FINDING EXCEP T TO CONFIRM IT. WE HAVE SEEN THAT THE RATIO OF THE DECISION OF HONBLE BOMBAY HI GH COURT IN CIT VS KNIGHT ITA NO.2 792 & 3107/M/2014 CRIMSO N PROPERTY P. LTD 4 FRANK (INDIA) (SUPRA) IS SQUARELY APPLICABLE ON THE FACTS OF THE CASE. THE HONBLE BOMBAY HIGH COURT IN CIT VS KNIGHT FRANK (INDIA) (S UPRA) WHILE CONSIDERING THE SIMILAR QUESTION HELD : (A) IT IS VERY CLEAR FROM THE READ ING OF SECTION 145A(A)(II) OF THE ACT THAT IT ONLY COVERS CASES WHERE THE AMOUNT OF TAX, DUTY, CESS OR FEE IS ACTUALLY PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO THE PLACE OF ITS LOCATION AND CONDITION AS ON THE DATE OF VALUATION. (B) IN THIS CASE, THE ASSESSEE HAS ADMITTEDLY NOT PAID OR INCURRED ANY LIABILITY FOR T HE PURPOSES OF BRINGING ANY GOODS TO THE PLACE OF ITS LOCATION. IN THIS CASE, THE ASSESSEE IS RENDERING SERVICES. THUS, ON THE PLAIN READING OF SECTION145A(A)(II) OF THE ACT, IT IS SELF EVIDENT THAT THE SAME WOULD NOT APPLY TO THE SERVICE TAX BILLED ON RENDERING OF SERVICES. THIS IS SO AS THE SERVICE TA X BILLED HAS NO RELATION TO ANY GOODS NOR DOES IT HAVE ANYTHING TO DO WITH BRINGING THE GOODS TO A PARTICULAR LOCATION. (C) THE EXPLANATION TO SECTION 145 A(A) OF THE ACT DOES NOT EXPAND ITS SCOPE. AN EXPLANATION NORMALLY DOES NOT WIDEN THE SCOPE OF TH E MAIN SECTION. IT MERELY HELPS CLARIFYING AN AMBIGUITY. (SEE ZAKIYR BEGAM V/S. SHA NAZ ALI & ORS., 2010 (9) SCC 280). THE MAIN PART OF THE SECTION SPECIFICALLY RES TRICT ITS AMBIT ONLY TO VALUATION OF PURCHASE AND SALE OF GOODS AND INVENTORY. RENDERING OF SERVICE IS NOT GOODS OR INVENTORY. GOODS WOULD MEAN MOVABLES AND INVENTORY WOULD MEAN STOCK OF GOODS. THEREFORE, THE EXPLANATION WOULD ONLY APPLY FOR VAL UATION OF SALES AND PURCHASE OF GOODS AND STOCK OF GOODS AS PROVIDED IN THE MAIN PA RT. THE EXPLANATION IN THIS CASE CLARIFIES/ EXPLAINS THAT ANY TAX, DUTY, CESS O R FEE PAID OR INCURRED WILL HAVE TO BE TAKEN INTO ACCOUNT FOR VALUATION OF GOODS EVEN I F SUCH PAYMENT RESULTS IN ANY BENEFIT/ RIGHT TO THE PERSON MAKING THE PAYMENT. TH IS EXPLANATION WAS NECESSARY AS OTHERWISE IN TERMS OF ACCOUNTING STANDARD (AS2) I SSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA PROVIDES THAT COST O F GOODS WOULD INCLUDE THE DUTIES AND TAXES PAID, OTHER THEN THE DUTIES AND TA XES WHICH GIVE A RIGHT TO RECOVER THE SAME FROM THE TAXING AUTHORITIES TO ILLUSTRAT E DUTY DRAW BACK ETC. THUS, THE EXPLANATION ONLY SEEKS TO CLARIFY THE FACT THAT NOT WITHSTANDING ANY RIGHT ACQUIRED ON PAYMENT OF TAXES TO RECOVER THE SAME FROM THE GO VERNMENT, FOR THE PURPOSE OF SECTION 145A OF THE ACT, THE SAME CANNOT BE EXCLUDE D EVEN THOUGH THE AS2 PROVIDES OTHERWISE. IT DOES NOT EVEN REMOTELY DEAL WITH THE ISSUE OF SERVICE TAX. (D) FURTHER, IT IS TO BE NOTED THA T SERVICE TAX WAS FIRST INTRODUCED IN INDIA BY FINANCE ACT, 1994. SECTION 145A OF THE ACT WAS FIRS T INTRODUCED INTO THE ACT ONLY BY FINANCE (NO.2) ACT, 1998 W.E.F. 1ST APRIL, 1999. IT WAS THEREAFTER SUBSTITUTED BY FINANCE (NO.2) ACT, 2009 WHICH IS IDENTICAL, EXCEPT FOR ADDITION OF CLAUSE (B), DEALING WITH INTEREST. HOWEVER, THE PARLIAMENT DID NOT WHILE SUBSTITUTING IT, DEEM IT FIT TO EXPLICITLY INCLUDE THE VALUATION OF SERVICES THEREIN. THUS, IT IS CLEAR THAT THE LEGISLATURE NEVER INTENDED TO RESTRICT THE APPLICAB ILITY OF SECTION 145A OF THE ACT ONLY TO GOODS AND NOT EXTEND IT TO SERVICES. AS OBS ERVED BY THE APEX COURT IN STATE OF BIHAR V/S. S. K. ROY AIR 1966 (SC) 1995: IT IS WELL RECOGNIZED PRINCIPLE IN DEALING WITH CON STRUCTION THAT A SUBSEQUENT LEGISLATION MAY BE LOOKED AT IN ORDER TO SEE WHAT I S THE PROPER INTERPRETATION TO ITA NO.2 792 & 3107/M/2014 CRIMSO N PROPERTY P. LTD 5 BE PUT UPON AN EARLIER ACT WHERE THE EARLIER ACT IS OBSCURE OR CAPABLE OF MORE THEN ONE INTERPRETATION. WE MUST MAKE IT CLEAR THAT WE DO N OT FIND ANY AMBIGUITY IN SECTION 145A OF THE ACT AS ARISING FOR OUR CONSIDERATION. HOWEVER, EVEN IF ONE WERE TO ASSUME THE MAIN PART OF SECTION 145A OF THE ACT, IS CAPABLE OF MORE THAN ONE INTERPRETATION, THE INTERPRETATION SOUGHT TO BE CANVASSED BY THE REVENU E, IS NOT SUSTAINABLE. THEREFORE, SECTION 145A OF THE ACT WOULD HAVE NO AP PLICATION IN CASES WHERE SERVICE IS PROVIDED BY THE ASSESSEE. (E) IN VIEW OF THE ABOVE, THE QUES TION (I) AS PROPOSED DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED. (F) REGARDING QUESTION (II) IT IS AN ADMITTED POSITION BEFORE US THAT THE ASSESSEE HA D NOT CLAIMED ANY DEDUCTION ON ACCOUNT OF THE SERVICE TAX PAYABLE IN ORDER TO DETERMINE ITS TAXABLE INCOME. IN THE ABOVE VIEW, TH ERE CAN BE NO OCCASION TO INVOKE SECTION 43B OF THE ACT. THE ISSUE STANDS CONCLUDED AGAINST THE REVENUE BY THE DECISIONS OF THIS COURT IN COMMISSIONER OF INCOME T AX VS. OVIRA LOGISTICS P. LTD. 377 ITR 129 AND COMMISSIONER OF INCOME TAX VS. CALI BRE PERSONNEL SERVICES PVT. LTD. (INCOME TAX APPEAL NO. 158 OF 2013) RENDERED O N 2ND FEBRUARY, 2015. THUS, CONSIDERING THE ABOVE LEGAL POSITION AS DISCU SSED ABOVE THE GROUND OF APPEAL RAISED BY ASSESSEE IS COVERED IN FAVOUR OF A SSESSEE, HENCE WE ALLOW THE GROUND NO.1 OF THE APPEAL IN FAVOUR OF THE ASSESSEE . 7. GROUND NO 2 AND 3 OF ASSESSEES APPEAL AND THE GROU NDS OF APPEAL RAISED BY THE REVENUE (IN ITA 3107/M/2014 ) ARE INTERCONNECTED . THUS, WE HAVE HEARD ALL THE GROUNDS ALTOGETHER. THE LD AR FOR THE ASSESSEE WOUL D ARGUE THAT THE AO WHILE MAKING DISALLOWANCE OF INTEREST EXPENSES HELD THAT ASSESSEE NOT FILED DOCUMENTARY EVIDENCE WHICH MAY SHOW THE NEXUS OF UT ILIZATION OF LOAN. THE ASSESSEE FILED EVIDENCE DURING FIRST APPELLATE STAG E. THE LD CIT(A) CALLED REMAND REPORT FROM AO AND AFTER APPRECIATING THE DOCUMENT ARY EVIDENCES HELD THAT SHARE IN THE PROPERTY (DHANWATY PROPERTY) WAS PRED ETERMINED AND INCOME WAS OFFERED TO TAX. THE LD CIT(A) OBSERVED THAT FROM TH E REMAND REPORT IT WAS NOT CLEAR IF THE LOAN HAVE BEEN ACTUALLY BEEN USED FOR THE ACQUISITION OF PROPERTY AND DIRECTED THE AO TO VERIFY THE FACT WHILE GIVING EFF ECT TO HIS ORDER. ON THE GROUNDS OF APPEAL RAISED BY REVENUE IN ITS CROSS AP PEAL IT WAS ARGUED BY LD AR THAT AS PER THE DECISION OF BOMBAY HIGH COURT CIT VS PRUTHVI BROKERS & SHARE BROKERS 349 ITR 336, THE ASSESSEE WAS ENTITLED TO R AISED ADDITIONAL GROUND OF APPEAL BEFORE THE APPELLATE AUTHORITY. IT WAS FURTH ER ARGUED THAT THE ASSESSEE IS ITA NO.2 792 & 3107/M/2014 CRIMSO N PROPERTY P. LTD 6 ENTITLED FOR THE ENTIRE INTEREST EXPENSES INCLUDING OF RS.60,34,149/-. THE LD AR RELIED UPON THE DECISION OF BADA SAAB PROPERTY (P) LTD VS ACIT [2010] 8 TAXMAN.COM 33(MUM), K.S. KAMALAKANNAN VS ACIT [2010 ]126 ITD 231(CHENNAI) AND CBDT CIRCULAR NO. 028 DATED 20.08. 1969. ON THE OTHER HAND THE LD DR FOR THE REVENUE SUPPORTED THE ORDER OF AO . THE LD DR FOR REVENUE FURTHER ARGUED THAT LD CIT(A) ERRED IN DIRECTING TH E AO TO ASSESS THE INCOME OF DHANWATY HOUSE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND TO ALLOW THE INTEREST AGAINST THE RENT SHOWN ON THE BASIS OF ADDITIONAL EVIDENCE. DURING THE ASSESSMENT PROCEEDING THE ASSESSEE REPEATEDLY S UBMITTED THAT THE LOAN AVAILED HAS BEEN USED FOR ACQUIRING THE DHAPLA HOU SE ONLY AND NOT AS STATED ABOUT HAVING INVESTED THE MONEY BORROWED FOR ACQUI RING OWNERSHIP RIGHT IN THE DHANWATY HOUSE. THE ASSESSEE HAS NOT FILED ANY RE VISED RETURN OF INCOME NOR BROUGHT SUCH FACT BEFORE THE ASSESSING OFFICER. THE LD CIT (A) HAS NO JURISDICTION TO ENTERTAIN ADDITIONAL GROUND IN ABSE NCE OF THE FACTS WHICH WAS NOT BROUGHT BEFORE THE ASSESSING OFFICER. THE ADDITIONA L GROUND OF APPEAL RAISED DURING THE FIRST APPELLATE STAGE WAS NOT BASED ON T HE FACTS AVAILABLE BEFORE THE ASSESSING OFFICER. THE LD DR PRAYED THAT THE ORDER PASSED BY LD CIT (A) IS LIABLE TO BE SET ASIDE. IT WAS ARGUED THAT THE RATIO OF DE CISION RELIED BY LD AR ARE ENTIRELY DIFFERENT ON FACTS AND THE RATION OF THE D ECISIONS ARE NOT APPLICABLE ON THE FACTS OF PRESENT CASE IN ANYWAY. 8. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND FURTHER PERUSED THE ORDERS OF AUTHORITIES BELOW AND THE VARIOUS DOCUMEN TS PLACED ON RECORD. WE HAVE SEEN THAT DURING THE ASSESSMENT PROCEEDINGS TH E AO NOTICED THAT ASSESSEE HAD CLAIMED INTEREST EXPENSES OF RS. 89,25,318/- ON REPAYMENT OF LOANS AND DEDUCTION UNDER SECTION 24(B). THE ASSESSEE WAS ASK ED TO SPECIFY THE REASONS FOR TAKING INTEREST-BEARING LOAN ALONG WITH DOCUMENTARY EVIDENCE AND TO PROVE THAT THE SAME HAD BEEN UTILISED FOR PURPOSE FOR WHICH IT HAD BEEN TAKEN, THE YEAR IN WHICH THE PROPERTY WAS RENTED OUT, THE YEAR OF PURC HASE AND THE SOURCE OF FUND ALONG WITH DOCUMENTARY EVIDENCE. THE AO ALSO ASKED THE ASSESSEE TO PROVIDE THE DETAILS OF INTEREST ON LOANS ALONG WITH THE SUP PORTIVE DOCUMENTS. THE ITA NO.2 792 & 3107/M/2014 CRIMSO N PROPERTY P. LTD 7 ASSESSEE FILED ITS REPLY DATED 23 AUGUST 2011. IT WAS CONTENDED ON BEHALF OF ASSESSEE THAT IT HAS NOT TAKEN ANY SECURED LOAN DUR ING THE YEAR UNDER CONSIDERATION. THE PROPERTY WAS ACQUIRED INDIA IN 1 995-96. SEVERAL ADDITION AND IMPROVEMENT WAS CARRIED OUT IN THE SAID PROPERTY AN D THE GROSS BLOCK IS AROUND RS. 9.80 CRORES. THE ASSESSEE SPECIFICALLY PLEADED THAT OVER THE YEARS THE DIRECT NEXUS OF THE FUND TAKEN AND USED FOR ACQUISITION BE COME CLOUDED AS LOANS ARE TAKEN, REPAID THROUGH OTHER LOAN TAKEN AND THE CYCL E KEEPS ON MOVING. AFTER RECEIPT OF REPLY OF ASSESSEE THE AO AGAIN SPECIFICA LLY ASKED THE ASSESSEE TO FURNISH THE BANK STATEMENT TO SHOW THAT THE PAYMENT MADE FOR INVESTMENT IN THE PROPERTY. AS ASSESSEE NOT FURNISHED THE REQUIRED IN FORMATION THE ASSESSING OFFICER VERIFIED THE PAST RECORD OF THE ASSESSEE AN D ON THE BASIS OF PAST RECORD THE AO CONCLUDED OUT OF THE NEW LOAN OF RS. 9.57 CRORE THE ASSESSEE UTILISED AN AMOUNT OF RS. 6.07 CRORE FOR CREATING A NEW ASSET A ND PAYMENT OF DEFERRED TAX LIABILITY. THE AO CONCLUDED THAT THE BALANCE AMOUNT OF RS. 3.50 CRORE HAS BEEN USED FOR REPAYMENT OF OTHER LOANS WHICH WAS UTILISE D FOR THE PURPOSE OF PURCHASES/ACQUISITION OF ASSET, ON WHICH THE ASSESS EE IS GETTING RENTAL INCOME, FOR WHICH THE ASSESSEE CAN BE SAID TO BE ENTITLED TO C LAIM DEDUCTION UNDER SECTION 24(B) IN RESPECT OF INTEREST CHARGES PAID TO DHFL O NLY RS. 3.50 CRORE AS AGAINST THE INITIAL DISBURSEMENT OF LOAN FROM DHFL OF RS. 3 .98 CRORE IN ABSENCE OF ANY DOCUMENTARY EVIDENCE WHICH MAY INDICATE THE NEXUS. THUS THE AO WORKED OUT DISALLOWANCE OF INTEREST EXPENSES OF RS.60,34,149/- ( OUT OF RS. 89,25,318/-). DURING THE FIRST APPELLATE STAGE THE ASSESSEE FILED APPLICATION FOR RAISING ADDITIONAL GROUNDS OF APPEAL AND ALSO FILED ADDITIO NAL DOCUMENTS. THE APPLICATION FOR RAISING THE ADDITIONAL GROUNDS OF A PPEAL AND THE FILING OF ADDITIONAL DOCUMENTS WERE REFERRED TO AO FOR HIS OB JECTIONS AND COMMENTS. THE AO ALONG WITH HIS LETTER DATED 08.07.2013 SUBMITTED HIS REPORT AND OBJECTED FOR FILING THE ADDITIONAL DOCUMENTS CONTENDING THAT THE ASSESSEES CASE IS NOT COVERED BY RULE 46A AS DURING ASSESSMENT SUFFICIEN T OPPORTUNITY WAS GIVEN. THE AOP WAS NOT DECLARED NOR WAS THE CLAIM IN RESPE CT OF DHANWATY PROPERTY RAISED BY ASSESSEE DURING ASSESSMENT. IN RESPONSE T O THE REMAND REPORT AND THE ITA NO.2 792 & 3107/M/2014 CRIMSO N PROPERTY P. LTD 8 OBJECTIONS OF AO THE ASSESSEE SUBMITTED DETAILED WR ITTEN SUBMISSION DATED 12.12.2013, WHICH HAS BEEN MADE A PART OF ORDER BY LD CIT(A). AFTER CONSIDERING THE REMAND REPORT AND THE WRITTEN SUBMI SSION THE LD CIT(A) CONCLUDED THAT IT IS NOT CLEAR AS TO WHETHER LOAN H AS BEEN UTILISED IN THE ACQUISITION OF THE PROPERTY IN QUESTION( DHANWATY P ROPERTY). THOUGH IT APPEARS FROM THE BALANCE SHEET THAT BORROWED FUNDS WERE UTI LISED IN ACQUISITION OF THE PROPERTY. AND AFTER REFERRING THE PROVISIONS OF SEC TION 26 AND 67A DIRECTED THE AO TO ASSESS THE INCOME FROM HOUSE PROPERTY AS IN COME FROM AOP IS TAXABLE AS INCOME FROM HOUSE PROPERTY UNDER THE SPECIFIC PR OVISION OF SEC 26. WE HAVE NOTICED THAT THE LD CIT(A) ADMITTED THAT IT IS NOT CLEAR THAT BORROWED FUND WAS UTILISED FOR ACQUISITION OF PROPERTY. THE LD CIT(A ) DIRECTED THE AO TO ASSESS THE INCOME OF THE PROPERTY WHICH WAS NOT CLAIMED DURING THE ASSESSMENT. THE ORDER OF LD CIT(A) IS NOT SUSTAINABLE IN SUCH CIRCUMSTANC ES. THE LD CIT(A) HAS NOT GIVEN SPECIFIC REASON AS TO WHY THE ADDITIONAL GROU NDS OF APPEAL WAS ADMITTED. THE RATIO OF THE VARIOUS DECISIONS RELIED BY LD AR IS NOT APPLICABLE OF THE FACTS OF THE PRESENT CASE. 9. HERE, THE BASIC DISPUTE IS IF THE BORROWED FUNDS WE RE UTILISED OR NOT FOR ACQUISITION OF PARTICULAR PROPERTY OR NOT. THERE I S NO DISPUTE WHERE A FRESH LOAN WAS AVAILED TO REPAY THE EARLIER LOAN FOR ACQUISITI ON OF THE PROPERTY; THE INTEREST PAYABLE IN RESPECT OF SECOND LOAN IS ALSO DEDUCTABL E U/S 24. CONSIDERING THE PECULIARITY OF THE FACT OF THE CASE WE ARE OF THE V IEW THAT THIS ISSUE NEEDS TO BE EXAMINED AFRESH BY DULY CONSIDERING ADDITIONAL EVID ENCES. ACCORDINGLY, WE RESTORE THE SAME TO THE FILE OF AO FOR EXAMINING TH E ISSUE AFRESH IN ACCORDANCE WITH LAW WITHOUT BEING INFLUENCE BY THE DECISION TA KEN BY THE LD CIT(A). THE AO SHALL MAKE ADEQUATE INQUIRY/ INVESTIGATION FROM THE FINANCIAL INSTITUTE REGARDING THE NATURE OF BORROWED FUNDS/ LOAN ITS UT ILISATION IN ACQUISITION OF PROPERTY AND IF ANY SUCH CLAIM WAS MADE BY ASSESSEE IN RESPECT OF THE DHANWATY PROPERTY IN PAST. THE ASSESSEE IS ALSO D IRECTED TO CO-OPERATE WITH AO AND PROVIDE ALL NECESSARY INFORMATION AND DOCUMENTS WELL IN TIME. WITH THESE DIRECTIONS THE APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ITA NO.2 792 & 3107/M/2014 CRIMSO N PROPERTY P. LTD 9 10. ITA NO. 3107/M/2014 . AS IN ASSESSEES APPEAL IN ITA NO.2791/M/2014 WE HAVE ALREADY RESTORED THE CONNECTED GROUNDS OF APPE AL TO THE FILE OF AO, THUS THE GROUNDS OF APPEAL RAISED BY REVENUE ARE ALSO RESTOR ED TO THE FILE OF AO. HENCE, THE GROUNDS OF APPEAL RAISED BY REVENUE ARE ALSO AL LOWED FOR STATISTICAL PURPOSE. 11. IN THE RESULT THE APPEAL OF ASSESSEE IS PARTLY ALLO WED AND THE APPEAL BY REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER ANNOUNCED IN OPEN COURT ON THIS 1 ST DAY OF FEBRUARY 2017. SD/- SD/- (B.R. BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 01/02/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI A SSISTANT REGISTRAR (ITAT)