KALPANA N JAIN, MUMBAI V. ITO WD 15(2)(2), MUMBAI

ITA 3097/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3034 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Assessee Lawyers: G P MEHTA
• Keywords: Business income; Salary income; Earning of tax free income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAMLAL NEGI, JUDICIAL MEMBER ITA NO. 3097/MUM/2013 (ASSESSMENT YEAR 2008-09) SMT. KALPANA N.JAIN, C/O. G.P.MEHTA & CO- CAS 807,TULSIANI CHAMBERS, 212, NARIMAN POINT, MUMBAI 400 021. PAN:AAEPJ 6964G ...... APPELLANT VS. THE ITO, WARD 15(2)(2), MUMBAI 400 020 .... RESPONDENT APPELLANT BY : SHRI G.P.MEHTA RESPONDENT BY : SHRI A.RAMACHANDRAN DATE OF HEARING : 07/09/2016 DATE OF PRONOUNCEMENT : 21/09/2016 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAI NING TO ASSESSMENT YEAR 2008-09 IS DIRECTED AGAINST AN ORD ER PASSED BY CIT(A)- 26 MUMBAI DATED 07/02/2013 WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 12/11/2010 . 2. IN THIS APPEAL, ASSESSEE HAS CONTESTED THE DISA LLOWANCE OF INTEREST EXPENDITURE OF RS.2,52,000/- AND RS.2,57,0 58/- CLAIMED WHILE 2 ITA NO. 3097/MUM/2013 (ASSESSMENT YEAR 2008-09) COMPUTING THE INCOME FROM HOUSE PROPERTY AND BUSINE SS INCOME RESPECTIVELY. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT ASSESSEE I NDIVIDUAL FILED HER RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 DECLAR ING A TOTAL INCOME AT RS.38,850/-, WHICH WAS SUBJECT TO SCRUTINY ASSES SMENT, WHEREBY THE TOTAL INCOME HAS BEEN ASSESSED AT RS.6,43,270/-. IN THE RETURN OF INCOME ASSESSEE DECLARED SALARY INCOME AS A DIRECTO R OF A CONCERN, HOUSE PROPERTY INCOME FROM A LET-OUT PROPERTY AS WE LL AS SELF-OCCUPIED PROPERTY AND ALSO BUSINESS INCOME BY WAY OF LOANS F ROM PROPRIETARY CONCERN, SHARE OF PROFIT FROM THE PARTNERSHIP FIRM M/S. PLASTIKA ENTERPRISES AND INTEREST ON CAPITAL WITH THE SAID F IRM M/S. PLASTIKA ENTERPRISES APART INCOME FROM OTHER SOURCES. THE A SSESSING OFFICER NOTICED THAT ASSESSEE HAD EARNED INTEREST FROM BANK S AND OTHER CONCERNS AND WAS ALSO PAYING INTEREST BORROWINGS FR OM CERTAIN INDIVIDUALS, THE NET EFFECT WAS AN OUTFLOW OF RS.5, 09,058/- ON ACCOUNT OF INTEREST. IN THE RETURN OF INCOME, ASSESSEE ALLOCA TED THE AFORESAID OUTFLOW TOWARDS THE RENTAL INCOME RS.2,50,000/- A ND THE BALANCE WITH RESPECT TO THE CONTRIBUTION TO CAPITAL INVESTED IN THE PARTNERSHIP FIRM M/S. PLASTIKA ENTERPRISES AND IN THE PROPRIETARY C ONCERN, JUST RIGHT - RS.2,57,058/-. THE AFORESAID DEDUCTIONS CLAIMED WHI LE COMPUTING INCOME FROM HOUSE PROPERTY AND BUSINESS INCOME RESP ECTIVELY HAVE BEEN DENIED BY THE LOWER AUTHORITIES, AGAINST WHICH , ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WITH RESPECT TO THE DEDUCTION OF RS.2,52,000/- C LAIMED AGAINST THE RENTAL INCOME FROM THE PROPERTY AT GITA INDUSTR IAL ESTATE, IT HAS 3 ITA NO. 3097/MUM/2013 (ASSESSMENT YEAR 2008-09) BEEN POINTED OUT BY THE LD. REPRESENTATIVE FOR THE ASSESSEE THAT THE SAID PROPERTY WAS ACQUIRED BY THE ASSESSEE IN ASSE SSMENT YEAR 1999- 2000 BY RAISING AN INTEREST FREE AN LOAN FROM M/S . PLASTIKA ENTERPRISES, A PARTNERSHIP FIRM. IT WAS POINTED OUT THAT SUBSE QUENTLY IN ASSESSMENT YEAR 2001-02 ASSESSEE RAISED INTEREST BEARING LOANS , WHICH WERE UTILIZED TO REPAY THE INTEREST FREE LOAN TAKEN FROM M/S. PL ASTIKA ENTERPRISES FOR ACQUISITION OF PROPERTY. THE LD. REPRESENTATIVE FO R THE ASSESSEE POINTED OUT THAT IN ASSESSMENT YEAR 2001-02, ASSESS EE HAD CLAIMED DEDUCTION OF INTEREST PAID ON BORROWED FUNDS WHILE COMPUTING THE INCOME UNDER THE HEAD HOUSE PROPERTY, WHICH STOOD A LLOWED IN AN ASSESSMENT FINALIZED UNDER SECTION 143(3) OF THE AC T DATED 31/01/2003. SIMILARLY, IT IS POINTED OUT THAT IN ASSESSMENT YEA R 2003-04 ALSO SUCH INTEREST PAYMENT STOOD ALLOWED IN THE ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT. UNDER THESE CIRCUMSTANCES, IT IS POINTED OUT THAT THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN MAKING T HE IMPUGNED DISALLOWANCE. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE POINTED OUT THAT THERE WAS NO EVIDENCE TO PROVE THAT THE PROPER TY ACQUIRED WAS OUT OF BORROWED FUNDS, THEREFORE, THE CLAIM HAS BEEN RI GHTLY DENIED. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND FIND NO JUSTIFICATION TO SUSTAIN THE DISALLOWANCE OF RS.2,5 2,000/- REPRESENTING INTEREST EXPENDITURE. QUITE CLEARLY, IN THE EARLIE R YEARS SIMILAR EXPENDITURE HAS BEEN ALLOWED AS A DEDUCTION AGAINST THE RENTAL INCOME EARNED FROM LETTING OUT OF THE PROPERTY IN TERMS OF SECTION 24(B) OF THE ACT. FOLLOWING THE EARLIER ORDERS, AND IN THE ABSE NCE OF ANY CHANGE IN 4 ITA NO. 3097/MUM/2013 (ASSESSMENT YEAR 2008-09) FACTS OR LAW BROUGHT OUT BY THE REVENUE, IT IS DIRE CTED THAT THE DEDUCTION OF RS.2,52,000/- ON ACCOUNT OF INTEREST B E ALLOWED AGAINST THE RENTAL INCOME. THUS, ON THIS ASPECT ASSESSEE S UCCEEDS. 7. THE OTHER ISSUE IS WITH REGARD TO A CLAIM FOR DE DUCTION OF INTEREST OF RS.2,57,058/- WHILE COMPUTING THE BUSINESS INCOM E. IT HAS BEEN POINTED OUT THAT THE SAID EXPENDITURE IS INCURRED F OR BORROWING DEPLOYED IN THE CAPITAL OF THE PARTNERSHIP FIRM M/S . PLASTIKA ENTERPRISES AS WELL AS THE CAPITAL USED IN THE PROPRIETARY CONC ERN. IN THIS CONTEXT, IT WAS POINTED OUT THAT DURING THE YEAR ASSESSEE HAD E ARNED INTEREST ON CAPITAL DEPLOYED IN THE PARTNERSHIP FIRM AT RS.1,98 ,578/- AND THAT SO FAR AS THE SHARE OF PROFIT FROM THE PARTNERSHIP FIRM I S CONCERNED, THERE HAS BEEN A LOSS OF RS.1,13,085/- DURING THE YEAR. IT I S POINTED OUT THAT SUCH LOSS HAS BEEN EXCLUDED WHILE COMPUTING THE TOTAL IN COME AND, THEREFORE, NO EXEMPT INCOME HAS BEEN EARNED FROM TH E PARTNERSHIP FIRM. ON THIS ASPECT, WE FIND THAT THE LOWER AUTHO RITIES HAVE NOT ADVANCED ANY CREDIBLE REASON TO DENY THE CLAIM OF T HE ASSESSEE, WHICH IS HEREBY DIRECTED TO BE ALLOWED. THUS, ON THIS AS PECT ALSO ASSESSEE SUCCEEDS. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21/09/2016 SD/- SD/- (RAMLAL NEGI) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 21/09/2016 VM , SR. PS 5 ITA NO. 3097/MUM/2013 (ASSESSMENT YEAR 2008-09) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI