Mrs. Priyanka Venkatesh nee N.P. Priyanka, Bangalore V. ITO, Bangalore

ITA 407/BANG/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9431 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 11-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 10-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K Y NINGOJI RAO
• Section: 234B; 2

Judgement Text

ITA.407/BANG/2016 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A NO.407/BANG/2016 (ASSESSMENT YEAR : 2007-08) MRS. PRIYANKA VENKATESH NEE N. P. PRIYANKA, NO.20, 4 TH CROSS, WEST OF KANAKAPURA ROAD, 7 TH BLOCK, JAYANAGAR, BENGALURU 560 082 .. APPELLAN T PAN : ALLPP5197M V. INCOME-TAX OFFICER, WARD 3(3)(4), BENGALURU .. RESPONDENT ASSESSEE BY : SHRI. K. Y. NINGOJI RAO, CA REVENUE BY : SHRI. BIPIN C. N, JCIT HEARD ON : 13.07.2016 PRONOUNCED ON : 26.08.2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY ASSESSEE, IT HAS ALTOGETHE R TAKEN SIX GROUNDS OF WHICH GROUND.1 IS GENERAL IN NATURE, GROUNDS 5 AND 6 ARE ON LEVY OF INTEREST ITA.407/BANG/2016 PAGE - 2 U/S.234A AND 234B OF THE INCOME-TAX ACT,1961 (THE ACT IN SHORT), WHICH ARE CONSEQUENTIAL IN NATURE NEEDING NO SPECIFIC ADJ UDICATION. 02. IN ITS GROUND.2, ASESSEE ASSAILS DENIAL OF DED UCTION OF INTEREST OF RS.2,02,125/-, U/S.24(B) OF THE ACT. FACTS APROPOS ARE THAT ASSESSEE HAD CLAIMED A SUM OF RS.2,02,125/- AGAINST RENTAL INCOM E AS INTEREST PAID. CONFIRMATION LETTER FROM ONE SRI LAKSHMI ENTERPRISE S WAS FILED IN THIS REGARD. AS PER THE ASSESSEE IT HAD TAKEN A LOAN OF RS.17,25,000/- FROM SRI LAKSHMI ENTERPRISES FOR CONSTRUCTION OF THE BUILDIN G ON WHICH RENT WAS SHOWN AS INCOME. HOWEVER, AO DID NOT ACCEPT THIS. AS PER THE AO, CONFIRMATION LETTER FILED FROM SRI LAKSHMI ENTERPRI SES DID NOT MENTION WHAT WAS THE INTEREST PAYABLE BY THE ASSESSEE. AS PER THE AO, CLAIM OF THE ASSESSEE WAS NOT IN CONFORMITY WITH SECTION 24(B) O F THE ACT. HE MADE DISALLOWANCE OF RS.2,02,125/-. 03. IN ITS APPEAL BEFORE CIT (A) ARGUMENT OF THE AS SESSEE WAS THAT SRI LAKSHMI ENTERPRISES WAS OWNING A PROPERTY WHICH WAS GIVEN AS A SECURITY FOR RAISING A LOAN FROM ING VYSYA BANK. CONTENTION OF THE ASSESSEE WAS THAT ING VYSYA BANK HAD ISSUED DDS FOR PURCHASING T HE PROPERTY ON WHICH RENTAL INCOME WAS DECLARED. ASSESSEE SUBMITTED THA T SRI LAKSHMI ENTERPRISE WAS A REAL ESTATE CONCERN. DDS WERE ISS UED BY ING VYSYA ITA.407/BANG/2016 PAGE - 3 BANK, BASED ON THE LOAN APPLICATION SUBMITTED BY SR I LAKSHMI ENTERPRISES. THEREFORE THE LOAN INTEREST WAS PAID BY THE ASSESSE E TO ING VYSYA BANK THROUGH THE SAID FIRM. HOWEVER, THE ABOVE CONTENTI ON WAS NOT ACCEPTED BY THE CIT (A). ACCORDING TO HIM, LIABILITY TO PAY IN TEREST ON MONEY BORROWED FROM THE BANK WAS THAT OF SRI LAKSHMI ENTERPRISES A ND NOT OF THE ASSESSEE. 04. NOW BEFORE US, LD. AR STRONGLY ASSAILING THE OR DERS OF LOWER AUTHORITIES SUBMITTED THAT COPY OF THE BANK ACCOUNT OF SRI LAKSHMI ENTERPRISES WITH ING VYSYA BANK, PLACED AT PAPER BO OK PAGE 24 CLEARLY REFLECTED THAT DDS WERE ISSUED ON 26.06.2005. AS P ER THE LD AR, IN THE PURCHASE DEED OF THE PROPERTY ON WHICH RENTAL INCOM E WAS RETURNED BY THE ASSESSEE, DETAILS OF CONSIDERATION PAID CLEARLY MEN TIONED THE DDS ISSUED BY ING VYSYA BANK LTD. AS PER THE LD. AR, JUST BECAUS E THE LOANS WERE ROUTED THROUGH SRI LAKSHMI ENTERPRISES WOULD NOT DI SENTITLE THE ASSESSEE FROM CLAIMING EXEMPTION OF INTEREST U/S. 24(B) OF T HE ACT. 05. PER CONTRA, LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 06. I HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. SECTION 24(B) OF THE ACT, IS REPRODUCED HEREUNDER : ITA.407/BANG/2016 PAGE - 4 (B) WHERE THE PROPERTY HAS BEEN ACQUIRED, CONSTRUCT ED, REPAIRED, RENEWED OR RECONSTRUCTED WITH BORROWED CAPITAL, THE AMOUNT OF ANY INTEREST PAYABLE ON SUCH CAPITAL : 07. REQUIREMENT AS PER THE ABOVE SECTION IS THAT BO RROWED CAPITAL HAS TO BE USED FOR ACQUISITION OR CONSTRUCTION OF A PROPER TY. IF IT IS SO USED THE AMOUNT OF INTEREST PAYABLE HAS TO BE ALLOWED AS A D EDUCTION UNDER THE SAID SECTION. ASSESSEE HAS CLEARLY DEMONSTRATED THAT TH E DDS PAID FOR THE PURCHASE OF PROPERTY ON WHICH RENT WAS RETURNED BY HER WERE ISSUED BY ING VYSYA BANK LTD. DD NUMBERS AND OTHER DETAILS H AVE BEEN MENTIONED IN THE SALE DEED DT.27.06.2005. IN THE BANK STATEM ENT OF SRI LAKSHMI ENTERPRISES WITH ING VYSYA BANK LTD, THE ISSUANCE O F THE ABOVE DDS HAS BEEN CLEARLY MENTIONED AS 25.06.2005. IT IS NOT RE QUIRED UNDER THE LAW THAT THE LOAN OBTAINED FOR ACQUIRING A PROPERTY SHOULD B E FROM A SCHEDULED OR NATIONALISED BANK. ASSESSEE HAVING RAISED THE LOAN THROUGH SRI LAKSHMI ENTERPRISES PAYMENT OF INTEREST TO THE SAID FIRM WA S AN ALLOWABLE DEDUCTION SINCE LOAN AMOUNT WAS USED FOR ACQUISITION OF PROPE RTY. I AM OF THE OPINION THAT DISALLOWANCE WAS NOT WARRANTED. SUCH DISALLOW ANCE STANDS DELETED. GROUND.2 STANDS ALLOWED. ITA.407/BANG/2016 PAGE - 5 08. VIDE GROUNDS 3 AND 4, GRIEVANCE RAISED BY THE A SSESSEE IS THAT RENTAL INCOME FROM FURNITURE AND FIXTURES COMING TO RS.3,1 0,650/- WAS CONSIDERED UNDER THE HEAD INCOME FROM OTHER SOURCES. 09. IN THIS REGARD, WHAT I FIND IS THAT CIT (A) HAS GIVEN A CLEAR FINDING THAT AGREEMENTS WERE SEPARATE. ASSESSEE HAD TWO AG REEMENTS, ONE FOR RENTING OUT THE PREMISES AND THE SECOND FOR RENTING OUT THE FURNITURE AND FITTINGS. THERE IS NOTHING ON RECORD TO SHOW THAT THE FURNITURE AND FIXTURES WHICH WERE RENTED OUT SEPARATELY WERE AN INTEGRAL P ART OF THE BUILDING. IN SUCH A SITUATION I CANNOT FAULT THE LOWER AUTHORITI ES IN TAKING A VIEW THAT RENTAL INCOME HAD TO BE CONSIDERED UNDER THE HEAD INCOME FROM OTHER SOURCES. I DO NOT FIND ANY REASON TO INTERFERE WI TH THE ORDERS OF LOWER AUTHORITIES. GROUNDS 3 AND 4 STAND DISMISSED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH DAY OF AUGUST, 2016. SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN ITA.407/BANG/2016 PAGE - 6 COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR