KERUL KIRAN PARIKH, MUMBAI V. ACIT 19(2), MUMBAI

ITA 3910/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8401 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 01-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Business income; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO. 3910/MUM/2018 (ASSESSMENT YEAR: 2012-13) SHRI KERUL KIRAN PARIKH 517, CHANDRALOK B MANAV MANDIR ROAD MALABAR HILL MUMBAI 400006 VS. ASSISTANT COMMISSIONER OF INCOME TAX 19(2) MUMBAI PAN AABPP4734D APPELLANT RESPONDENT APPELLANT BY: SHRI BHUPENDRA SHAH RESPONDENT BY: SHRI CHAITANYA ANJARIA DATE OF HEARING: 16.07.2019 DATE OF PRONOUNCEMENT: 16.07.2019 O R D E R PER B.R. BASKARAN, AM THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19-03-2018 PASSED BY LD CIT(A)-3, MUMBAI AND IT REL ATES TO THE ASSESSMENT YEAR 2012-13. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING DISALLOWANCE OF INTEREST EXPENDITURE OF RS.5.71 LAKHS CLAIMED BY THE ASSESSEE. 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE OF RS.5,71,177/- AGAINST INTEREST INCOME OF RS.23,222/- . THE AO ASKED THE ASSESSEE TO JUSTIFY THE CLAIM. THE ASSESSEE SUBMITTED THAT HE HAD TAKEN LOANS TO PURCHASE A FLAT. HE ALSO SUBMITTED THAT HE HAS ALSO INVESTED 2 ITA NO. 3910/MUM/2018 SHRI KERUL KIRAN PARIKH FUNDS IN TWO PARTNERSHIP CONCERNS AND ONE PROPRIETA RY CONCERN. ACCORDINGLY, THE ASSESSEE SUBMITTED THAT THE INTERE ST INCOME MAY BE ADJUSTED AGAINST BUSINESS INCOME OR HOUSE PROPERTY INCOME. THE AO REJECTED THE CLAIM OF THE ASSESSEE AND ACCORDINGLY DISALLOWED INTEREST EXPENDITURE OF RS.5.71 LAKHS. THE LD CIT(A) ALSO C ONFIRMED THE SAME. 3. I NOTICE FROM THE RECORD THAT THE ASSESSEE H AS CLAIMED TO HAVE USED THE LOAN FUNDS TO PART FINANCE PURCHASE OF FLA T. HE HAS ALSO STATED THAT HE HAS MADE INVESTMENTS IN TWO PARTNERS HIP CONCERNS AND ONE PROPRIETARY CONCERN. IT IS WELL SETTLED PROPOS ITION THAT THE INTEREST PAYABLE ON LOAN IS DEDUCTIBLE, IF THE LOAN IS USED FOR EARNING INCOME. THE INTEREST PAYABLE ON LOAN BORROWED FOR PURCHASE OF FLAT IS DEDUCTIBLE U/S 24 AGAINST INCOME FROM HOUSE PROPERT Y. SIMILARLY, IF THE LOAN IS INVESTED IN BUSINESS, THE INTEREST IS D EDUCTIBLE AGAINST BUSINESS INCOME. 4. IN THE INSTANT CASE, I NOTICE THAT THE ASSESS EE HAS NOT DEMONSTRATED THE NEXUS BETWEEN THE LOAN FUNDS AND T HE INVESTMENT MADE IN FLAT/BUSINESS CONCERN. WITHOUT SHOWING THE SAID NEXUS, IT WOULD BE DIFFICULT FOR ANYONE TO ACCEPT THE CLAIM F OR DEDUCTION OF INTEREST. SINCE IT INVOLVES VERIFICATION OF FACTUA L ASPECTS, I AM OF THE VIEW THAT THIS ISSUE NEEDS TO BE EXAMINED AFRESH. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT(A) AND RESTORE THE SAME TO THE FILE OF THE AO FOR EXAMINING THE CLAIM OF THE ASSESSEE. I ALSO DIRECT THE ASSESSEE TO FURNISH THE DETAILS OF USAGE OF LOAN FU NDS AND ALSO EXPLAIN THE SECTION UNDER WHICH THE INTEREST EXPENDITURE/PA RT OF INTEREST EXPENDITURE IS ALLOWABLE. AFTER EXAMINING THE SUBM ISSIONS OF THE ASSESSEE, THE AO MAY TAKE APPROPRIATE DECISION IN A CCORDANCE WITH THE LAW. 3 ITA NO. 3910/MUM/2018 SHRI KERUL KIRAN PARIKH 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JULY, 2019. SD/ - (B.R. BASKARAN) ACOUNTANT MEMBER MUMBAI, DATED: 16 TH JULY, 2019 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -3, MUMBAI 4. THE PR.CIT - 1, MUMBAI 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.