M/s Mala Builders Pvt. Ltd., Chandigarh V. ACIT, Chandigarh

ITA 438/CHANDI/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8258 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 25-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 24-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NOS.438 & 439/CHD/2014 (ASSESSMENT YEARS : 2009-10 & 2010-11) M/S MALA BUILDERS PVT. LTD., VS. THE A.C.I.T., SCO 98-99, SUB CITY CENTRE, CENTRAL CIRCLE-II, SECTOR 34, CHANDIGARH. CHANDIGARH. PAN: AABCN0099B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHOK GOYAL RESPONDENT BY : SHRI SUSHIL KUMAR, CIT DR DATE OF HEARING : 24.01.2017 DATE OF PRONOUNCEMENT : 09.03.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : BOTH THE ABOVE APPEALS RELATE TO THE SAME ASSESSEE AND HAVE BEEN FILED AGAINST SEPARATE ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS) (CENTRAL), GURGAON DATED 28-02-2014 RELATING TO ASSESSMENT YEA RS 2009-10 AND 2010-11. 2. BOTH THE PARTIES AGREED THAT THE ISSUE INVOLVED IN BOTH THE APPEALS WAS COMMON AND THEREFORE THE AP PEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY W AY OF A COMMON ORDER. 2 3. FOR THE SAKE OF CONVENIENCE WE SHALL BE DEALING WITH THE FACTS IN THE CASE OF ITA NO. 438/CHD/2014 RELATING TO A.Y 2009-10. ITA NO. 438/CHD/2014 : 4. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL: 1. THAT THE LEARNED CIT (A) HAS ERRED ON FACTS AND LAW IN UPHOLDING THAT EVEN IN THE ABSENT OF ANY INCREMENTI NG MATERIAL FOUND DURING THE COURSE OF SEARCH, ADDITIO N IS STILL GOOD. HENCE RELIEF BE ALLOWED 2. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST ON THE BASIS THAT COMPLETE DETAILS WERE NO T SUBMITTED AND BOOKS OF ACCOUNTS NOT PRODUCED, WHEN COMPLETE D ETAILS AS REQUIRED WERE SUBMITTED AND BOOKS OF ACCOUNTS WERE PRODUCED DURING THE ASSESSMENT PROCEEDING. THE COMPLETE DETA IL OF LOAN RAISED FOR CONSTRUCTION WAS FILED. 3. THE LEARNED CIT (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST ON THE GROUND THAT REQUISITE CERTIFICATE A S REQUIRED UNDER THE PROVISO, FROM THE PERSON TO WHOM INTEREST WAS PAID WAS NOT SUBMITTED, WHEN THE CERTIFIED COPY OF LOAN ACCOUNTS TO WHOM INTEREST WAS PAID, WAS FILED DURING ASST PR OCEEDING. HENCE RELIEF BE ALLOWED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD DELETE OR MODIFY ANY GROUND OF APPEAL BEFORE THE SAME IS HEARD OR DISPOS ED OFF. 5. AT THE OUTSET IT MAY BE STATED THAT GROUND NO. 1 WAS NOT PRESSED BEFORE US AND THE SAME MAY THEREFOR E BE TREATED AS DISMISSED. GROUND NO. 4, BEING GENERAL I N NATURE, NEEDS NO ADJUDICATION. 3 6. GROUND NO. 2 AND 3 RELATE TO THE COMMON ISSUE OF DISALLOWANCE OF INTEREST PAID UNDER SECTION 24 ( B) OF THE INCOME TAX ACT, 1961. 7. BRIEF FACTS RELATING TO THE SAME ARE THAT, DURI NG ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE ASSESS EE COMPANY HAD CLAIMED DEDUCTION OF INTEREST OF RS.4,93,233/- WHILE COMPUTING ITS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE AO DISALLOWED THE C LAIM SINCE THE ASSESSEE FAILED TO FILE ANY CERTIFICATE RELATING TO THE SAME AS EVIDENCE, FROM THE PERSON TO WHOM INTER EST WAS PAYABLE ON THE CAPITAL BORROWED. BEFORE THE LD. CIT (APPEALS), THE ASSESSEE FILED DETAILED SUBMISSIONS CONTENDING THAT THE ASSESSEE COMPANY HAD TAKEN A LA ND ON LEASE FOR 99 YEARS ON 20.4.1983 AT A TOTAL COST OF RS.27,10,000/- AND HAD FURTHER CONSTRUCTED A BUILDI NG ON THE SAME DURING THE FINANCIAL YEARS 1985-86,1986-87 , 1987-88, 1989-90 INCURRING A TOTAL COST OF RS.28,29 ,120/- THE ASSESSEE FURTHER CONTENDED THAT IT HAD TAKEN LO ANS TO THE TUNE OF RS.65,95,143/- FOR THE SAME AND WAS PA YING INTEREST ON THE SAME WHICH WAS CLAIMED AS DEDUCTION UNDER SECTION 24(B) OF THE INCOME TAX ACT. AS EVIDE NCE OF THE SAME, THE ASSESSEE FILED COPIES OF WEALTH TAX R ETURNS RELATING TO ASSESSMENT YEARS 1989-90 TO 1991-92, SH OWING THE IMPUGNED ASSETS AND THE LOANS TAKEN AGAINST T HE SAME AS ALSO THE BALANCE SHEET OF THE ASSESS EE AS ON 31/03/1990, ALONGWITH THE ASSESSMENT ORD ER FOR 4 ASSESSMENT YEAR 1994-95 PASSED UNDER SECTION 143(3) OF THE ACT, ACCEPTING THE ASSESSEES CLAIM OF DEDUCTIO N UNDER SECTION 24(B) OF THE INCOME TAX ACT. LD.CIT (APPEA LS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HELD THAT THE ASSESSEE HAD NOT BEEN ABLE TO GIVE ANY PLA USIBLE EXPLANATION WITH REGARD TO THE DEDUCTION OF INTERES T CLAIMED AMOUNTING TO RS.4,93,233/- AND HAD FAILED T O FILE ANY CERTIFICATE WITH EVIDENCE FROM THE PERSON TO WH OM INTEREST WAS PAYABLE ON THE CAPITAL BORROWED. SHE THEREFORE HELD THAT THE CLAIM OF THE ASSESSEE WAS N OT ALLOWABLE AND UPHELD THE DISALLOWANCE MADE BY THE A O IN THIS REGARD. 8. AGGRIEVED BY THE SAME THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US. 9. DURING THE COURSE OF ARGUMENTS MADE BEFORE US, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE THE LD.CIT(APPEALS) AND STATED THAT THA T THE ASSESSEE HAD CLEARLY DEMONSTRATED BEFORE THE AO TH AT THE PROPERTY ON WHICH IT HAD EARNED RENTAL INCOME HAD BEEN ACQUIRED AND CONSTRUCTED OUT OF LOANS TAKEN ON WHIC H IT WAS PAYING INTEREST, AND WHICH WAS THEREFORE ALLOWA BLE UNDER SECTION 24(B) OF THE ACT. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE WEALTH TAX ASSES SMENT ORDERS AND COMPUTATION OF WEALTH FOR THE ASSESSMENT YEAR 1989-90 TO ASSESSMENT YEAR 1991-92, AS ALSO THE B ALANCE 5 SHEET OF THE ASSESSEE AS ON 31-03-1990 AND THE INCO ME TAX ASSESSMENT ORDER PASSED UNDER SECTION 143(3) FO R ASSESSMENT YEAR 1994-95 AND COMPUTATION OF INCOME I N THIS REGARD. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT HAD AMPLY PROVED THAT ITS CLAIM OF INTEREST WAS ALL OWABLE U/S SECTION 24(B) OF THE ACT. 10. LD.DR ON THE OTHER HAND STATED THAT SINCE THE ASSESSEE HAD NOT FURNISHED ANY CERTIFICATE RELATING TO THE CLAIM OF INTEREST, THE CLAIM WAS NOT ALLOWABLE. 11. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THE AUTHORIT IES BELOW AS ALSO THE DOCUMENTS PLACED BEFORE US. 12. THE ISSUE BEFORE US IS, VIS A VIS THE CLAIM OF THE ASSESSEE OF INTEREST PAID ON LOANS TAKEN FOR ACQU IRING A HOUSE PROPERTY U/S 24(B), INCOME FROM WHICH HAS BEE N CLAIMED UNDER THE HEAD HOUSE PROPERTY. WE FIND TH AT THE REASON FOR DISALLOWING THE CLAIM OF THE ASSESSEE I S THAT THE ASSESSEE HAS NOT BEEN ABLE TO GIVE ANY PLAUSIBLE EXPLANATION OF AS TO WHY THE DEDUCTION OF INTEREST SHOULD BE ALLOWED TO IT, AND HAVING NOT FILED ANY CERTIFICATE FROM THE PERSON TO WHOM THE INTEREST WAS PAYABLE. 6 13. AS FOR THE DENIAL OF CLAIM FOR THE REASON THAT NO CERTIFICATE WAS FURNISHED BY THE ASSESSEE, WE FIND THAT THERE IS NO SUCH REQUIREMENT UNDER THE ACT FOR FURN ISHING A CERTIFICATE BEFORE CLAIMING DEDUCTION UNDER SECTI ON 24(B) OF THE ACT, IN CASE THE HOUSE PROPERTY IS LET OUT. THE SAID REQUIREMENT IS APPLICABLE ONLY IN CASE DEDUCTION OF INTEREST IS CLAIMED IN RESPECT OF SELF OCCUPIED HOU SE PROPERTY. IN THE PRESENT CASE SINCE THE ASSESSEE HA S UNDISPUTEDLY AND ADMITTEDLY BEEN SHOWING RENTAL INC OME, THE SAID HOUSE PROPERTY CANNOT BE TERMED AS SELF OCCUPIED AND THEREFORE THERE IS, WE HOLD, NO REQUI REMENT TO FURNISH ANY CERTIFICATE FOR THE PURPOSE OF CLAIM ING DEDUCTION OF INTEREST U/S 24(B) OF THE ACT. 14. REGARDING ABSENCE OF EXPLANATION AS TO WHY DEDUCTION SHOULD BE ALLOWED TO IT, WE FIND THAT THE ASSESSEE DID EXPLAIN TO THE AUTHORITIES BELOW THAT THE SAID PROPERTY HAD BEEN CONSTRUCTED BY TAKING LOAN AND HA D FILED COPIES OF WEALTH TAX RETURNS RELATING TO A Y 1989-90 TO 1991-92 STATING THAT THEY REFLECTED THE SAID PR OPERTY AND LOANS TAKEN FOR THE SAME THE ASSESSEE HAD ALSO FILED COPY OF ASSESSMENT ORDER PASSED U/S 143(3) OF THE A CT, FOR A.Y 1994-95 AND STATED THAT ITS CLAIM OF DEDUCTION OF INTEREST U/S 24(B) OF THE ACT FOR THAT YEAR HAD BEE N ACCEPTED. WE FIND THAT THE AUTHORITIES BELOW HAVE N OT ADVERTED ON THESE DOCUMENTS PLACED BEFORE THEM BUT HAVE SUMMARILY DISMISSED THE CONTENTION OF THE AS SESSEE 7 AND STATED THAT NO EXPLANATION HAS BEEN OFFERE D BY THE ASSESSEE REGARDING ITS CLAIM OF INTEREST. SINCE ALL THESE DOCUMENTS WERE THERE BEFORE THE LOWER AUTHORITIES, THE CLAIM OF THE ASSESSEE OUGHT TO HAVE BEEN CONSIDERE D IN VIEW OF THE DOCUMENTS FILED BY THE ASSESSEE. WE, THEREFORE, CONSIDER IT FIT TO RESTORE THE ISSUE BAC K TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF DOCUMENTS FURNISHED BY IT AND DECIDE THE ISSUE THEREAFTER IN ACCORDANCE WITH LAW. WE MAY ADD THAT THE ASSESSEE BE GIVEN DUE OPPORTUNITY OF HEARING IN THIS REGARD. 15. IN VIEW OF THE SAME GROUND NOS.2 AND 3 RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE S. 16. IN EFFECT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES ITA NO. 439/CHD/2014 17. IT IS RELEVANT TO OBSERVE HERE THAT GROUND NO. 1 RAISED BY THE ASSESSEE IN THIS APPEAL WAS NOT PRESS ED BEFORE US AND THE SAME IS, THEREFORE, TREATED AS DI SMISSED. 18. AS FAR AS GROUND NOS.2 AND 3, IT WAS COMMON GROUND BETWEEN BOTH THE PARTIES THAT THE FACTS AND CIRCUMSTANCES OF THE ISSUE RAISED IN THESE GROUNDS WERE SIMILAR TO THE FACTS AND CIRCUMSTANCES IN GROUND NO S.2 AND 3 RAISED IN ITA NO.438/CHD/2014. THE FINDINGS GIVEN BY US IN ITA NO.438/CHD/2014 SHALL, THEREFORE, APPL Y TO 8 THESE GROUNDS I.E. GROUND NOS.2 AND 3 OF THE PRESEN T APPEAL WITH EQUAL FORCE, WHICH THEREFORE ARE ALLOWE D FOR STATISTICAL PURPOSES 19. IN EFFECT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 20. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (C.M. GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 9 TH MARCH, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH