ITO, New Delhi V. M/s. Rangoli Garments Pvt. Ltd, New Delhi

ITA 3122/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3756 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 08-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 07-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KISHORE
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER I.T.A NO. 3122/DEL/09 ASSTT. YEAR 2006-07 ITO, WARD-15 (1) NEW DELHI. VS. RANGOLI GARMENTS PVT. LTD. 20, SUKHDEV VIHAR, NEW DELHI. AAACR4374F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI B.KISHORE, SR. DR. RESPONDENT BY: SHRI SALIL AGGARWAL, ADVOCATE ORDER PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 31 ST MARCH, 2005, PASSED FOR ASSTT. YEAR 2006-07. IN TH E ORIGINAL GROUND OF APPEAL, IT HAS PLEADED THAT LD. CIT(A) HA S ERRED IN DELETING THE DISALLOWANCE OF ` 8,41,419/- BEING INTEREST AMOUNT ON THE AMOUNT BORROWED FOR THE PURPOSE OF SETTING UP OF BUSINESS, IGNORING THE FACT THAT BUSINESS IS YET TO START AND THIS AMOUNT IS NOT ALL OWABLE. HOWEVER, REVENUE HAS REVISED ITS GROUNDS OF APPEAL AND FILED THE FRESH GROUND. IN THE REVISED GROUND, IT HAS PLEADED THAT LD. CIT(A) HAS ERRED IN ALLOWING ITA NO. 3122/DEL/09 ASSTT. YEAR 2006-07 2 THE INTEREST EXPENDITURE OF ` 8,41,419/- AGAINST THE INCOME FROM HOUSE PROPERTY AS THE RELEVANT INTEREST EXPENSE DOES NOT FALL WITHIN THE AMBIT OF SECTION 24(B) OF THE INCOME TAX ACT 1961. 2. LD. COUNSEL FOR THE ASSESSEE, AT THE VERY OUTSET , SUBMITTED THAT BY ALLOWANCE OF INTEREST EXPENSES AMOUNTING TO ` 8,41,419/-, THE REVENUE EFFECT IS LESS THAN ` 3 LACS. THE BOARD HAS ISSUED FRESH INSTRUCTIONS BEARING NO. 3/2011 DATED 9.2.2011. IN THESE INSTRUC TIONS THE BOARD HAS DIRECTED THE REVENUE AUTHORITIES NOT TO FILE APPEAL IN THE CASES WHERE TAX EFFECT BY VIRTUE OF LD. CIT(A)S ORDER IS LESS THAN ` 3 LACS. THE BOARD HAS PROVIDED CERTAIN EXCEPTIONS IN THE INSTRUCTION. ACC ORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE PRESENT CASE DOES NOT FALL IN THOSE EXCEPTIONS. HE PLACED ON RECORD COPY OF THE HONBLE DELHI HIGH COURTS DECISION IN THE CASE OF CIT VS. DELHI RACE CLUB AND ALSO COPY OF THE ITATS ORDERS IN THE CASE OF ACIT VS. M/S. UPKAR I N ITA NO. 4797/DEL/10. LD. DR THOUGH UNABLE TO CONTROVERT THE CONTENTION LD. COUNSEL FOR THE ASSESSEE BUT SUBMITTED THAT FULL BE NCH OF HONBLE PB AND HARYANA COURT IN THE CASE OF CIT VS. VARINDERA CONSTRUCTION CO. BAGHAPURANA REPORTED IN 239 CTR PAGE 1, HAS HELD TH AT THESE INSTRUCTIONS WOULD NOT APPLY ON PENDING APPEALS. TH EY ARE APPLICABLE WITH PROSPECTIVE EFFECT. ITA NO. 3122/DEL/09 ASSTT. YEAR 2006-07 3 3. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE ARE OF THE VIEW THAT HONBLE DELHI HIGH COURT IN THE CASES OF DELHI RACE CLUB HAS HELD THAT THESE INSTRUCTIONS WOULD APPLY ON THE PE NDING APPEAL. THE TAX EFFECT IS LESS THAN ` 3 LACS AND THEREFORE, APPEAL OF THE REVENUE IS NOT MAINTAINABLE. LD. DR THOUGH AT THE TIME OF HEARING CONTENDED THAT WHEN APPEAL WAS FILED, THIS LIMIT WAS NOT AVAILABLE AND THE CASE OF ASSESSEE HAS TO BE DEALT BY OLD INSTRUCTIONS. HOWEVER, IN VI EW OF HONBLE DELHI HIGH COURTS DECISION, WE DO NOT FIND ANY SUBSTANCE IN HIS SUBMISSION . 4. IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. ORDER PRONOUNCED IN THE OPEN COURT ON 8.6.2011. SD/- SD/- [K.D. RANJAN] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 8.6.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT