P. Durga Prasad, Hyderabad V. ITO, Hyderabad

ITA 332/HYD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1379 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2003-2004
• Appeal Filed On: 06-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: H PHANI RAJU
• Assessee Lawyers: K VASANT KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.332/HYD/09 (ASSESSMENT YEAR - 2003-04) SHRI P.DURGA PRASAD, SECUNDERABAD. (PAN - AIRPP 3513 C ) V/S INCOME-TAX OFFICER, WARD 2(2), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.VASANT KUMAR RESPONDENT BY : SHRI H.PHANI RAJU O R D E R PER AKBER BASHA, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A) III, HYDERABAD DATED 9.1.2009, FOR THE ASSE SSMENT YEAR 2003-04. 2. ONLY EFFECTIVE GRIEVANCE OF THE ASSESSEE IN THIS APPE AL IS DIRECTED AGAINST THE DISALLOWANCE OF HIS CLAIM FOR ALLOW ING SET OFF OF CHIT LOSS OF RS.5,85,966, AGAINST INCOME FROM HOUSE PROPERTY. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE, AN INDIVIDUAL, DERIVING INCOME FROM HOUSE PROPERTY, FILE D HIS RETURN OF INCOME FOR THE YEAR UNDER APPEAL ON 30.9.2003, DECLAR ING TAXABLE INCOME OF RS.22,51,707. THOUGH THE SAID RETURN WAS PRO CESSED UNDER ITA NO.332/HYD/09 SHRI P.DURGA PRASAD, SECUNDERABAD. . 2 S.143(1), RAISING A DEMAND OF RS.45,396, IN THE SCRUTIN Y ASSESSMENT THAT FOLLOWED, THE ASSESSING OFFICER EXAMINED THE ASSESSEE'S CLAIM FOR SET OFF OF CHIT LOSS OF RS.5,85,966 AGAINST INCOME FROM HO USE PROPERTY. HE OBSERVED THAT CHIT LOSS IS ELIGIBLE FOR DEDUCTION ONLY IF THE ASSESSEE IS DOING BUSINESS AND MAKES PROFIT OR LOSS AND DECLARES THE I NCOME/LOSS UNDER THE HEAD 'INCOME FROM BUSINESS'. SINCE THE ASSESSEE IN THIS CASE IS NOT DERIVING ANY INCOME ASSESSABLE UNDER THE HEAD 'INCO ME FROM BUSINESS OR PROFESSION', BUT DERIVING ONLY INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY', HE REJECTED THE ASSESSEE'S CLAI M, AND MAKING INTER ALIA AN ADDITION OF RS.5,85,966, COMPLET ED THE ASSESSMENT ON A TOTAL INCOME OF RS.28,47,676, AS AGAINST RETURNED INCOME OF RS.22,51,710, VIDE ORDER OF ASSESSMENT DATED 30.11.2007 , PASSED UNDER S.143(3) READ WITH S.147 OF THE ACT. 4. ON APPEAL, THE CIT(A) CONFIRMED THE VIEW TAKEN B Y THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. HE NCE, ASSESSEE IS IN SECOND APPEAL BEFORE US ON THIS ISSUE. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, REITERATING TH E CONTENTIONS URGED BEFORE THE LOWER AUTHORITIES, SUBMITT ED THAT CHIT LOSS IS NOTHING BUT ONLY INTEREST PAID FOR MONIES TAKEN IN ADVANCE AND CLAIM FOR SUCH LOSS HAS TO BE CONSIDERED FOR PURPOSES OF ALLOWING IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. HE RELIED IN THIS B EHALF, ON THE INSTRUCTIONS OF THE BOARD CONTAINED IN CIRCULAR NO.117 5 DATED 16TH MAY, 1978. HE ALSO FILED A PAPER-BOOK CONTAINING CHIT STATEM ENT; REMAND REPORT OF THE ASSESSING OFFICER SUBMITTED DURING THE FIRST APPELLATE PROCEEDINGS, AMONG OTHERS. HE ALSO RELIED ON A NUMBER O F DECISIONS, INCLUDING THE DECISIONS OF THE HYDERABAD BENCH OF THE TR IBUNAL IN THE ITA NO.332/HYD/09 SHRI P.DURGA PRASAD, SECUNDERABAD. . 3 CASES OF DR.T.SRIKUMAR V/S. ITO(ITA NO.545/HYD/2004 DAT ED 30.11.2005) AND VIJAY SHANTI TRADERS V/S. ITO (ITA NO .2772/HYD/88 DATED 4.6.1994). 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND, STRONGLY RELYING ON THE ORDERS OF THE LOWER AU THORITIES, SUBMITTED THAT ONLY THE INTEREST PAID ON LOANS TAKEN FOR CONSTRUCT ION OF HOUSE IS ALLOWABLE AS DEDUCTION UNDER S.24(B) OF THE ACT. THE CHIT LOSS CANNOT BE EQUATED WITH THE INTEREST PAYABLE ON BORROWED CAPITAL AND HENCE, THE LOWER AUTHORITIES WERE JUSTIFIED IN DISALLOWING THE CLA IM OF THE ASSESSEE. CHIT LOSS CAN BE ALLOWED TO BE SET OFF ONLY AGAINST INCO ME BUSINESS/PROFESSION. HE RELIED ON THE DECISION OF THE SPE CIAL BENCH OF THE TRIBUNAL(CHENNAI) IN THE CASE OF ACIT V/S. K.S.SHE TTY & CO. (263 ITR 71). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED F ACT THAT THE ONLY SOURCE OF INCOME FOR THE ASSESSEE IS INCOME FROM HOUSE PROPER TY, AND CONSEQUENTLY, THE ASSESSEE HAS NO INCOME ASSESSABLE UNDER THE H EAD 'INCOME FROM BUSINESS OR PROFESSION'. THAT BEING SO, TH E QUESTION THAT HAS TO BE CONSIDERED IS WHETHER THE CHIT LOSS CLAIMED BY TH E ASSESSEE CAN BE ALLOWED TO BE SET OFF AGAINST INCOME FROM HOUSE PROPERTY. THE ONLY DEDUCTIONS THAT CAN BE ALLOWED WHILE COMPUTING THE INCOME FROM HOUSE PROPERTY ARE THOSE SPECIFIED BY THE STATUTE IN S.2 4. IN THE ABSENCE OF ANY PROVISION FOR ALLOWANCE OF CHIT LOSS AGAIN ST PROPERTY INCOME, THE LOWER AUTHORITIES WERE JUSTIFIED IN NOT AL LOWING THE CLAIM OF THE ASSESSEE. THE CHIT LOSS, AS CLAIMED BY THE ASSESSEE, CANNOT BE EQUATED WITH INTEREST ON BORROWED FUNDS, WHICH IS ALLO WABLE UNDER S.24. ITA NO.332/HYD/09 SHRI P.DURGA PRASAD, SECUNDERABAD. . 4 THE ASSESSEE IN THE INSTANT CASE IS ADMITTEDLY HAVING INCO ME ASSESSABLE ONLY UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY'. EV EN THE CIRCULAR OF THE CBDT RELIED UPON BY THE LEARNED COUNSEL FOR THE A SSESSEE DIRECTED THAT IF THE ASSESSEE INCURS ANY CHIT LOSS DUE TO TAKING THE MONEY EARLIER AND PAYING MORE THAN THE WHAT THEY RECEIVED, IS TO BE TREATED AS BUSINESS LOSS. IN THE ABSENCE OF ANY BUSINESS/PROFESSION CARR IED ON BY THE ASSESSEE, CHIT LOSS CANNOT BE ALLOWED AS BUSINESS LOSS IN THE INSTANT CASE. THAT BEING SO, THE CASE-LAW RELIED UPON BY THE LEA RNED COUNSEL FOR THE ASSESSEE RELATING TO ALLOWABILITY OF CHIT LOSS AGAINS T INCOME/LOSS ASSESSABLE UNDER THE HEAD 'INCOME FROM BUSINESS/PROFESSION' OR 'INCOME FROM OTHER SOURCES' HAS NO APPLICATION TO THE FACTS OF TH E PRESENT CASE. IN THIS VIEW OF THE MATTER, WE FIND THAT THE LOWER A UTHORITIES ARE JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE. WE ACCORDINGLY UPHOLD THE ORDERS OF THE LOWER AUTHORITIES ON THIS ASPECT, AND REJE CT THE GROUNDS OF THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 13.11.2009 SD/- SD/- (N.R.S.GANESAN) (AKBER BASHA) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 13TH NOVEMBER, 2009. COPY FORWARDED TO: 1. SHRI P.DURGA PRASAD, C/O. NATARAJA IYER & CO., 1- 10-126, ASHOKNAGAR, HYDERABAD 500 020. 2. INCOME-TAX, OFFICER, WARD 2(2), HYDERABAD 3. CIT(A) III HYDERABAD ITA NO.332/HYD/09 SHRI P.DURGA PRASAD, SECUNDERABAD. . 5 4. COMMISSIONER OF INCOME TAX II HYDERABAD 5. THE D.R., ITAT, HYDERABAD. B.V.S.