Mrs. Ahuja Surjitkaur Ranjitsingh., Ahmednagar V. Income-tax Officer,

ITA 474/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1092 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Assessee Lawyers: V R BHOJWANI
• Keywords: Business income; Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KE DIA , AM ITA NO. 474 /PN/201 4 ASSESSMENT YEAR : 2009 - 10 MRS. AHUJA SURJITKAUR RANJITSINGH, NEWASA ROAD, TAL. SHRIRAMPUR, DIST. AHMEDNAGAR. PAN : ABEPA5682R . APPELLANT VS. THE INCOME TAX OFFICER , WARD 4, AHMEDNAGAR. . RESPONDENT / APPELLANT BY : SHRI V.R. BHOJWANI / RESPONDENT BY : SHRI DHEERAJ KUMAR JAIN / / DATE OF HEARING : 03 .0 9 .2015 DATE OF PRONOUNCEMENT: 24 . 0 9 .2015 / ORDER PER SUSHMA CHOWLA, JM : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) - IT/TP , PUNE DATED 07.01.2014 RELATING TO ASSESSMENT YEAR 2009 - 10 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. LEARNED ITO AS WELL AS HON. CIT(A) HAVE FAILED TO APPRECIATE THE FIGURES OF THE INTEREST PAID APPEARING IN THE BALANCE SHEET. HENCE THE ADDITIONS MADE AT RS.2,47,255/ - AND SUSTAINED IN APPEAL IS ILLEGAL. 2. LEARNED I.T.O. HAS FAILED TO G O THROUGH BALANCE SHEET FOR PREVIOUS YEAR RELEVANT TO ASSTT. YEAR 2009 - 10 TO FIND OUT THE TRUTH INSTEAD OF GOING THROUGH FINANCIAL TRANSACTION MENTIONED FOR A.Y. 2004 - 05 TO 2007 - 08 . HENCE APPROACH OF THE A.O. IS ARBITRARY AND ILLEGAL AND ADDITIONS OF RS.2 ,47,525/ - IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2 ITA NO. 474 /PN/201 4 3. APPELLANT CRAVES LEAVE TO ADD, AMEND AND MODIFY THE GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE CARRIES ON BUSINESS OF PLYING TRUCKS AND D ERIVES INCOME FROM PROPERTIES LET OUT. IN ADDITION, THE ASSESSEE EARNS INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS DISALLOWED EXCESSIVE INTEREST PAYMENT OF RS.2,47,255/ - , WHICH IS SUBJECT - MATTER OF APPEAL. IN THE FACTS O F THE CASE, THE ASSESSEE HAD JOINTLY PURCHASED TWO RESIDENTIAL PROPERTIES IN PUNE ALONG WITH HER HUSBAND, SHRI RANJITSINGH AHUJA. ONE PROPERTY WAS PURCHASED ON 04.09.2004 AND ANOTHER PROPERTY WAS PURCHASED ON 08.06.2006. FOR THIS PURPOSE, THE ASSESSEE HA D TAKEN A LOAN FROM HDFC BANK OF RS.1,03,00,000/ - AND OF RS.57,05,960/ - FROM STATE BANK OF INDIA RESPECTIVELY. THE ASSESSEE ALSO TOOK LOAN FOR PURCHASING OF THESE PROPERTIES FROM JEETSON TRANSPORT COMPANY, PROPRIETARY CONCERN OF SHRI RANJITSINGH PREMSINGH AHUJA, HER HUSBAND. SHE CLAIMED DEDUCTION UNDER SECTION 24(1)(VI) OF INTEREST PAID TO SHRI RANJITSINGH AHUJA. THE ASSESSING OFFICER EXAMINED THE ASSESSEES LOAN ACCOUNT WITH M/S AHUJA. THE ASSESSING OFFICER EXAMINED THE ASSESSEES LOAN ACCOUNT WITH M/S JEETSONS TRANSPORT COMPANY AND OBSERVED THAT THE TOTAL COST OF THE PROPERTY WA S RS.1,82,80,950/ - AGAINST WHICH BANK LOAN FROM HDFC BANK AND STATE BANK OF INDIA WERE TAKEN FOR A SUM OF RS.1,60,05,960/ - . AS THE ASSESSEE HA D PURCHASED BOTH THE PROPERTIES JOINTLY WITH EQUAL SHARE, HER CONTRIBUTION IN PURCHASE PRICE WA S RS.91,40,075/ - AND THE LIABILITY TOWARDS BANK LOAN WA S RS.80,02,980/ - . THE ASSESSING OFFICER THUS HELD THAT THE ASSESSEE REQUIRED LOAN OF BALANCE AMOUNT OF RS.11,37,495/ - ONLY, WHICH MONEY HA D BEEN TAKEN FROM JEETSONS TRANSPORT COMPANY. THE ASSESSING OFFICER HELD THA T THE PAYMENTS HAVE BEEN MADE TO M/S JEETSONS TRANSPORT COMPANY IN THE EARLIER YEARS AND THERE WA S NO POSSIBILITY OF OUTSTANDING LIABILITY AS ON 01.04.2008 IN RESPECT OF THE AFORESAID PROPERTIES AND THEREFORE ASSESSEE WA S NOT ELIGIBLE FOR DEDUCTION UNDER S ECTION 24(1)(VI) OF THE IT ACT . TH E ASSESSING OFFICER AL S O OBSERVED THAT THE INTEREST WA S NOT ALLOWABLE AGAINST THE BUSINESS INCOME SINCE THE ASSESSEE WA S AVAILING THE BENEFITS AS PER PROVISIONS UNDER SECTION 44AE OF THE ACT BEING IN PLYING BUSINESS OF TR UCKS, ETC.. 3 ITA NO. 474 /PN/201 4 4 . THE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAS REPAID THE LOANS TAKEN FROM JEETSONS TRANSPORT COMPANY BY 31.03.2007 AND THEREFORE THERE WA S NO JUSTIFICATION TO ALLOW DEDUCTIONS UNDER SECTION 24(1)(VI) AGAINST THE PROPERTY INCOME. ACCORDING LY, HE CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 5 . AGAINST THE ORDER OF THE CIT(A), ASSESSEE IS FURTHER IN APPEAL BEFORE US. 6 . BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE FINDINGS HAVE BEEN ARRIVED B Y THE AUTHORITIES BELOW WITHOUT CONSIDERING THE CASH FLOW STATEMENT AND BALANCE SHEET OF THE ASSESSEE FILED YEAR AFTER YEAR BEFORE THE ASSESSING OFFICER. ON PERUSAL OF THE COMPUTATION OF INCOME, IT CAN BE SEEN THAT THE RENTAL INCOME HAS BEEN DERIVED FROM OFFICE PREMISES AND RESIDENTIAL FLATS , AGAINST WHICH DEDUCTION HAS BEEN CLAIMED UNDER SECTION 24(1)(VI) OF THE ACT . 7 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. ON THE ORDERS OF AUTHORITIES BELOW. 8 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE BEFORE US, THE ASSESSEE HAD PURCHASED TWO PROPERTIES I.E. ONE ON 04.09.2004 AND THE SECOND ON 08.06.2006. THE SAID PROPERTIES WERE PURCHASED IN JOINT ALONG WITH HER HUSBAND IN EQUAL SH ARES. FOR PURCHASING THE SAID PROPERTIES, THE ASSESSEE HAD RAISED HOUSING LOANS FROM THE BANK AND HAD ALSO RECEIVED LOAN FROM JEETSON TRANSPORT COMPANY, WHICH WAS PROPRIETARY CONCERN OF THE HUSBAND OF ASSESSEE. AGAINST THE RENTAL INCOME RECEIVED BY THE A SSESSEE, THE ASSESSEE HAD CLAIMED DEDUCTION ON ACCOUNT OF INTEREST EXPENDITURE BOTH ON ACCOUNT OF INTEREST PAID TO THE BANK AND ALSO ON ACCOUNT OF INTEREST PAID TO JEETSON TRANSPORT COMPANY. THE ASSESSING OFFICER WAS OF THE VIEW THAT WHERE THE TOTAL COST OF THE PROPERTY INCLUDING STAMP DUTY, REGISTRATION CHARGES WAS RS.1,16,52,480/ - , AND SINCE THE PROPERTY WAS PURCHASED FROM THE LOAN TAKEN FROM THE BANK AT RS.1.03 CRORES, AGAINST INVESTMENT OF RS.1.16 CRORES, (FULL SHARE), THERE WAS NO MERIT IN THE CLAIM O F 4 ITA NO. 474 /PN/201 4 DEDUCTION ON ACCOUNT OF INTEREST PAID TO JEETSON TRANSPORT COMPANY. SIMILARLY, IN RESPECT OF PROPERTY NO.2 ALSO, THE ASSESSING OFFICER CONSIDERED THE BANK LOAN AND THE INVESTMENT MADE BY THE ASSESSEE AND WAS OF THE VIEW THAT WHERE THE ASSESSEE HAD TAKEN LOAN FOR THE PURCHASE OF PROPERTY, THERE WAS NO REQUIREMENT FOR ALLOWABILITY OF INTEREST EXPENDITURE ON ACCOUNT OF LOAN TAKEN FROM JEETSON TRANSPORT COMPANY. THE ASSESSING OFFICER FURTHER WAS OF THE VIEW THAT THE SAID LOAN WAS TAKEN OVER PERIOD FROM 01. 04.2004 TO 31.03.2009 FOR VARIOUS PURPOSES INCLUDING FOR THE PURCHASE OF FLAT FOR HER HUSBAND, PURCHASE OF AGRICULTURAL LAND, PLOTS, PAYMENT OF INCOME TAX, CONSULTANCY FEES, INCLUDING REPAYMENT OF BANK LOANS AND ALSO LOAN FOR PURCHASE OF PROPERTY FOR WHICH , SHE HAD OFFERED RENTAL INCOME. HOWEVER, THE SAID DEDUCTION WAS HELD TO BE NOT ALLOWABLE FOR PAYMENT OF INTEREST ATTRIBUTABLE TO LOANS FOR OTHER PERSONAL USE / PURPOSE AND ALSO BECAUSE THE TRUCK INCOME WAS DECLARED U NDER THE PROVISIONS OF SECTION 44AE OF THE ACT, NO FURTHER EXPENDITURE INCLUDING INTEREST WAS TO BE ALLOWED IN THE HANDS OF ASSESSEE. WE FIND NO MERIT IN THE OBSERVATIONS OF ASSESSING OFFICER, WHEREIN, ADMITTEDLY, THE ASSESSEE HAS THE OBSERVATIONS OF ASSESSING OFFICER, WHEREIN, ADMITTEDLY, THE ASSESSEE HAS CLAIMED THAT IT HAD UTILIZED THE SAID LOAN RECEIVED FROM JEETS ON TRANSPORT COMPANY EVEN FOR THE PURPOSE OF REPAYMENT OF HOUSING LOAN. WHETHER THE LOAN IS UTILIZED FOR THE PURCHASE OF THE PROPERTY OR THE REPAYMENT OF LOAN, UTILIZED FOR THE PURCHASE OF PROPERTY, THE SAME IS RELATABLE TO THE PROPERTY ACQUIRED BY THE AS SESSEE. IN THE ABSENCE OF ANY FINDINGS OF THE ASSESSING OFFICER TO ESTABLISH THAT THE CLAIM MADE BY THE ASSESSEE IN THIS REGARD WAS INCORRECT, WE FIND NO MERIT IN THE ORDERS OF AUTHORITIES BELOW IN DISALLOWING THE INTEREST CLAIMED UNDER SECTION 24(1)(VI) OF THE ACT AT RS.2,47,255/ - . IN ANY CASE, SIMILAR INTEREST EXPENDITURE HAS BEEN ALLOWED IN THE HANDS OF ASSESSEE FROM YEAR TO YEAR AND THE SAME IS ALLOWABLE IN THE HANDS OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION. ONE OF THE ISSUES RAISED BY THE ASSESS ING OFFICER WAS THAT WHERE THE ASSESSEE HAD ALREADY RAISED THE LOANS FROM BANK, THE MONEY WHICH WAS REQUIRED FOR THE BALANCE AMOUNT WAS MINIMAL AND IN ANY CASE, THE PAYMENT HAD BEEN MADE TO THE SAID CONCERN IN THE EARLIER YEARS AND THERE WAS NO POSSIBILITY OF ANY OUTSTANDING LIABILITY AS ON 01.04.2008. HOWEVER, 5 ITA NO. 474 /PN/201 4 PERUSAL OF THE BALANCE SHEET / CASH ACCOUNT REFLECTS THAT THE ASSESSEE HAS RECOGNIZED THE LIABILITY OF THE LOAN OUTSTANDING IN THE NAME OF JEETSON TRANSPORT COMPANY AND HAD REPAID THE SAME DURING TH E YEAR. I N VIEW THEREOF, WE FIND NO MERIT IN THE OBSERVATIONS OF ASSESSING OFFICER IN THIS REGARD. REVERSING THE ORDER OF CIT(A), WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF EXPENDITURE UNDER SECTION 24(1)(VI) OF THE ACT AT RS.2,47,255/ - . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 24 TH DAY OF SEPTEMBER , 2015. SD/ - SD/ - ( PRADIP KUMAR KEDIA ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER PUNE ; DATED : 24 TH SEPTEMBER , 2015. PUNE ; DATED : 24 TH SEPTEMBER , 2015. / GCVSR / COPY OF THE O RDER IS FOR WARDED TO : 1 ) THE ASSESSEE; 2 ) THE DEPARTMENT; 3 ) THE CIT(A) - IT/TP , PUNE; 4 ) THE CIT - IT/TP , PUNE; 5 ) THE DR A BENCH, I.T.A.T., PUNE; 6 ) GUARD FILE. / BY ORDER , //TRUE COPY// / SR. PRIVATE SECRETA RY , / ITAT, PUNE