MR. ABEEZAR FAIZULLABHOY, Mumbai V. CIT(A)-28, Mumbai

ITA 4831/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7823 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 18-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Keywords: Search and seizure
• Section: 143(3); 143(1); 143(2); 22

Judgement Text

ITA NO.4831/MUM/2019 A.Y.2015 - 16 MR. ABEEZAR FAIZULLABHOY VS. CIT(APPEALS) - 28 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI M.BALAGANESH (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA NO.4831/MUM/2019 (ASSESSMENT YEAR: 2015 - 16) MR. ABEEZAR FAIZULLABHOY C/O NANUBHAI DESAI & CO. 517, SIR VITHALDAS CHAMBERS, MUMBAI SAMACHAR MARG, MUMBAI, MAHARASHTRA 400 001 VS. COMMISSIONER OF INCOME TAX - (APPEALS) - 28 MAHARASHTRA PAN NO. AAAPF1616K ( ASSESSEE ) ( REVENUE ) ASSESSEE BY : NONE REVENUE BY : SHRI BRAJENDRA KUMAR , S ENIOR D.R DATE OF HEARING : 2 3/08 /2021 DATE OF PRONOUNCEMENT : 01 /09 / 2021 ORDER PER RAVISH SOOD, J.M: THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 28, MUMBAI, DATED 26.04.2019 , WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 27.12.2017 FOR A.Y.2015 - 16. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING GROUNDS BEF ORE US: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT (APPEALS) - 28, ERRED IN CONFIRMING THE DISALLOWA NCE OF DEDUCTION UNDER SECTION 2 4(B) OF THE INCOME TAX ACT PERTAINING TO INTEREST ON HOME LOAN AMOUNTING TO RS .2,00,000 / - ON THE GROUND THAT THE POSSESSION OF PROPERTY HAS NOT YET BE EN ACQUIRED BY THE APPELLANT. ITA NO.4831/MUM/2019 A.Y.2015 - 16 MR. ABEEZAR FAIZULLABHOY VS. CIT(APPEALS) - 28 2 2. THE APPELLANT SUBMITS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE SAID AMOUNT OF RS.2,00,000 / - SHOULD BE ALLOWED AS A DEDUCTION FROM THE INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY . 3. TH E APPELLATE PRAYS FOR APPROPRIATE RELIEF. 2. BRIEFLY STATED, THE AS S ESSEE WHO IS A LAWYER BY PROFESSION HAD E - FILED HIS RETURN OF INCOME FOR A.Y. 2015 - 16 ON 31.03.2017, DECLARING A TOTAL INCOME OF RS.1,19,68,190/ - . THE RETURN OF INCOME WAS INITIALLY PROCESSED AS SUCH U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT U/S 143(2) OF THE ACT. 3. DURING THE COU RSE OF THE ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE HAD UNDER THE HEAD INCOME FROM HOUSE PROPERTY CLAIMED DEDUCTION OF INTEREST PAID ON BORROWED CAPITAL OF RS. 2 LAC U NDER SEC. 24(B) OF THE ACT. ON BEING QUERIED, IT WAS SUBMIT TED BY THE ASSESSEE THAT THE AFORESAID CLAIM FOR DEDUCTION OF INTEREST PERTAINED TO THE FUNDS WHICH WERE BORROWED BY HIM FOR PURCHASING A RESIDENTIAL PROPERTY VIZ. FLAT NO. A - 2101, PALM BEACH RESIDENCY A WING, 21 ST FLOOR, SECTOR 4, PALM BEACH ROAD, NERUL, NAVI MUMBAI. HOWEVER, THE A . O TAKING NOTE OF THE FACT THAT THE ASSESSEE HAD NOT TAKEN POSSESSION OF THE AFOREMENTIONED PROPERTY IN QUESTION, THUS, DISALLOWED HIS AFORESAID CLAIM FOR DEDUCTION OF INTEREST U/S 24(B) OF THE ACT. ACCORDINGLY, THE A . O VIDE HIS ORDER PASSED U/S 143(3) OF THE ACT , DATED 27.12.2017 ASSESSED THE INCOME OF THE ASSESSEE AT RS.1,21,68,190/ - . 4. AGGRIEVED, THE ASSESSEE ASSAILED THE ASSESSMENT ORDER BEFORE THE CIT(A). HOWEVER, THE CIT(A) NOT FIND ING FAVOR WITH THE CONTENTIONS ADVANCED BY THE ASSESSEE UPHELD THE DISALLOWANCE OF THE ASSESSEES CLAIM FOR DEDUCTION U/S 24(B) OF THE ACT , OBSERV ING AS UNDER: 5.4 APPROS TO THE ABOVE, I FIND THAT THERE IS ABSOLUTELY NO FORCE IN THE CONTENTION OF THE APP ELLANT AT ALL. THIS IS BECAUSE, IT IS AN ADMITTED POSITION THAT THE PARTICULAR PROPERTY IN RESPECT OF WHICH THE APPELLANT IS TRYING TO CLAIM THE DEDUCTION U/S. 24(B) IS NEITHER IN THE POSSESSION OF THE APPELLANT, NOR HE HAS ANY SORT OF PHYSICAL DOMAIN OVER THE SAME. IN REALITY, THE FACT SITUATION OF THE APPELLANT IS THAT HERE IS A DISPUTE GOING ON BETWEEN THE ITA NO.4831/MUM/2019 A.Y.2015 - 16 MR. ABEEZAR FAIZULLABHOY VS. CIT(APPEALS) - 28 3 APPELLANT AND THE SOCIETY/BUILDER DUE TO WHICH THERE IS PROTRACTED LITIGATION AND THAT THE APPELLANT IS NOT IN A POSITION TO TAKE CONTROL/DOMAIN OF TH E IMPUGNED PROPERTY. 5.4 IT IS VERY CLEAR THAT SECTION 24(B) PRE - SUPPOSES THAT THERE SHOULD BE AN INCOME CHARGEABLE UNDER THE HEAD HOUSE PROPERTY AGAINST WHICH THE DEDUCTION OF MUNICIPAL TAX ETC., CAN BE CLAIMED. HERE, THIS IS NOT SO AT ALL BECAUSE OF THE DISPUTE AS REFERRED TO THE ABOVE AND HENCE, IT IS AN AXIOMATIC COROLLARY THAT THE APPELLANT IS NOT LIKELY TO GET ANY KIND OF CONTROL/DOMAIN OVER THE PROPERTY IN THE NEAR FUTURE AND HENCE, IS NOT LIKELY TO HAVE ANY INCOME FROM THE SAME. IF THE LOGIC OF THE APPELLANT IS TO BE GIVEN CREDENCE TO, THEN IT WOULD MEAN THAT FOR SEVERAL YEARS, THE APPELLANT WOULD NOT BE IN RECEIPT OF ANY INCOME FROM THE PROPERLY AND YET, THE DEDUCTION U/S. 24(B) WOULD CONTINUE TO BE CLAIMED BY IT . THIS, OBVIOUSLY, CANNOT BE THE INTENT OF THE LEGISLATURE IN PROVIDING FOR THE TYPOLOGY OF THE DEDUCTION U/S. 24(B). 5.5 IN VIEW OF THE ABOVE DISCUSSION, I CANNOT FIND ANY FAULT WITH THE ORDER OF THE AO IN DISALLOWING THE DEDUCTION U/S. 24(B) TO THE TUNE OF RS.2,00,000/ - . THE SAME IS TH EREFORE, CONFIRMED AND THE GROUND NO.1 AND ITS SUB - GROUNDS ARE DISMISSED. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER PASSED BY THE CIT(A) HA S CARRIED THE MATTER IN APPEAL BEFORE US. AS THE ASSESSEE APPELLANT DESPITE HAVING BEEN INTIMATED ABOUT THE HE ARING OF THE APPEAL HAD FAILED TO PUT UP AN APPEARANCE BEFORE US, THEREFORE, WE ARE CONSTRAINED TO PROCEED WITH THE APPEAL AS PER RULE 24 OF THE APPELLATE TRIBUNAL RULES, 1963 AND DISPOSE OFF THE SAME AFTER HEARING THE RESPONDENT REVENUE AND PERUSING THE O RDERS OF THE LOWER AUTHORITIES. 6. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER S OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. I SSUE INVOLVED IN THE PRESENT APPE AL LIES IN A NARROW COMPASS I.E AS TO WHETHER OR NOT THE LOWER AUTHORITIES WERE JUSTIFIED IN LAW AND THE FACTS OF THE CASE IN DECLINING THE ASSESSEES CLAIM FOR DEDUCTION OF THE INTEREST PAID ON LOAN THAT WAS UTILIZED FOR PURCHASING A RESIDENTIAL HOUSE VIDE A REGISTERED AGREEMENT DATED 20.09.2009. AS IS DISCERNIBLE FROM THE RE CORDS, THE ASSESSEE HAD VIDE A REGISTERED AGREEMENT DATED 20.09.2009 PURCHASED A RESIDENTIAL PROPERTY, VIZ. FLAT NO. A - 2101, PALM BEACH RESIDENCY A WING, 21 ST FLOOR, SECTOR 4, PALM BEACH ROAD, NERUL, NAVI MUMBAI FOR A CONSIDERATION OF ITA NO.4831/MUM/2019 A.Y.2015 - 16 MR. ABEEZAR FAIZULLABHOY VS. CIT(APPEALS) - 28 4 RS.1,60,89,250/ - . FOR ACQUIRING THE AFOREMENTIONED PROPERTY THE ASSESSEE HAD TAKEN A LOAN ON WHICH INTEREST OF RS. 2,69,842.12 WAS PAID BY HIM DURING THE YEAR UNDER CONSIDERATIO N. CERTIFICATE EVIDENCING THE PAYMENT OF THE AFORESAID AMOUNT OF INTEREST ON BORROWED FUNDS WAS FILED BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. AS OBSERVED BY US HEREINABOVE, THE CLAIM FOR DEDUCTION OF INTEREST U/S 24(B) OF RS.2 LAC WAS RAISED BY THE ASSESSEE IN HIS RETURN OF INCOME. HOWEVER, THE SAID CLAIM OF DEDUCTION WAS DECLINED BY THE A.O, FOR THE REASON, THAT THE ASSESSEE HAD NOT TAKEN POSSESSION OF THE PROPERTY IN QUESTION. ON APPEAL, THE VIEW TAKEN BY THE A.O WAS UPHELD BY THE CIT (A). FOR A FAIR APPRECIATION OF THE ISSUE IN QUESTION, WE THINK IT APT TO CULL OUT SEC. 24(B) OF THE ACT AS WAS AVAILABLE ON THE STATU TE DURING THE YEAR UNDER CONSIDERATION, AS UNDER: 24. INCOME CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY SHALL BE COMPUTED AFTER MAKING THE FOLLOWING DEDUCTIONS, NAMELY: - (A). ..................................................................................................................... (B) . WHERE THE PROPE RTY HAS BEEN ACQUIRED, CONSTRUCTED, REPAIRED, RENEWED OR RECONSTRUCTED WITH BORROWED CAPITAL, THE AMOUNT OF ANY INTEREST PAYABLE ON SUCH CAPITAL: PROVIDED THAT IN RESPECT OF PROPERTY REFERRED TO IN SUB - SECTION (2) OF SECTION 2 3, THE AMOUNT OF DEDUCTION SH ALL NOT EXCEED THIRTY THOUSAND RUPEES: PROVIDED FURTHER THAT WHERE T HE PROPERTY REFERRED TO IN THE PROVISO IS ACQUIRED OR CONSTRUCTED WITH CA PITAL BORROWED ON OR AFTER THE 1 ST DAY OF APRIL, 1999 AND SUCH ACQUISITION OR CONSTRUCTION IS COMPLETED [WITHIN [F IVE] YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH CAPITAL WAS BORROWED], THE AMOUNT OF DEDUCTION UNDER THIS CLAUSE SHALL NOT EXCEED. [TWO LAKH RUPEES]. EXPLANATION . WHERE THE PROPERTY HAS BE EN ACQUIRED OR CONSTRUCTED WIT H BORROWED CAPITAL, THE INTEREST, IF ANY, PAYABL E ON SUCH CAPITAL BORROWED FOR T HE PERIOD PRIOR TO THE PREVIOUS YEAR IN WHICH THE PROPERTY HAS BEEN ACQUIRED OR CONSTRUCTED, AS REDUCED BY ANY PAN THEREOF ALLOWED AS DEDUCTION UNDER ANY OTHER PROVISION OF THIS ACT SHALL BE DEDUCTED UNDER THIS C LAUSE IN EQUAL INSTALMENTS FOR THE SAID PREVIOUS YEAR AND FOR EACH OF THE FOUR IMMEDIATELY SUCCEEDING PREVIOUS YEAR:] [PROVIDED ALSO THAT NO DEDUCTION SHALL BE MADE UNDER THE SECOND PROVISO UNLESS THE ASSESSEE FURNISHES A CERTIFICATE, FROM THE PERSON TO WHOM ANY INTEREST IS PAYABLE ON THE CAPITAL BORROWED, SPECIFYING THE AMOUNT OF INTEREST PAYABLE BY THE ASSESSEE FOR THE PURPOSE OF SUCH ACQUISITION OR CONSTRUCTION OF THE PROPERTY, ITA NO.4831/MUM/2019 A.Y.2015 - 16 MR. ABEEZAR FAIZULLABHOY VS. CIT(APPEALS) - 28 5 OR, CONVERSION OF THE WHOLE OR ANY PART OF THE CAPITAL BORROWED WHICH REMAINS TO BE REPAID AS A NEW LOAN. EXPLANATION. - FOR THE PURPOSES OF THIS PROVISO, THE EXPRESSION 'NEW LOAN' MEANS THE WHOLE OR ANY PART OF A LOAN TA KEN BY THE ASSESSEE SUBSEQUENT TO THE C APITAL BORROWED, FOR THE PURPOSE OF REPAYMENT OF SUCH CAPITAL.] ON A PERUSAL OF THE AFORESAID STATUTORY PROVISION, WE FIND THAT THE SAME THEREIN CONTEMPLATES THAT AN ASSESSEE SHALL BE ENTITLED TO CLAIM DEDUCTION OF ANY INTEREST PAYABLE ON THE CAPITAL BORROWED BY HIM FOR ACQUIRING, CONSTRUCTING, REPAIRING, RENEWING OR RECONSTRUCTING A PROPERTY. ADMITTEDLY, THE ASSESSEE HAD ACQUIRED THE RESIDENTIAL PROPERTY IN QUESTION WAY BACK VIDE AN AGREEMENT DATED 20.09.2009. IN OUR CONSIDERED VIEW, FOR CLAIMING DE DUCTION OF INTEREST UNDER SEC. 24(B) OF THE ACT THERE IS NEITHER ANY SUCH PRECONDITION NO R AN ELIGIBILITY CRITERIA PRESCRIBED THAT THE ASSESSEE SHOULD HAVE TAKEN POSSESSION OF THE PROPERTY SO PURCHASED OR ACQUIRED BY HIM. INSOFAR THE 1 ST PROVISO AND 2 ND PROVISO TO SEC. 24(B) ARE CONCERNED, THE SAME ONLY CONTEMPLATES AN INNATE UPPER LIMIT OF THE AMOUNT OF DEDUCTION QUA THE PROPERTIES REFERRED TO IN SUB - SECTION (2) OF SEC. 23 OF THE ACT I.E A RESIDENTIAL HOUSE. HOWEVER, THE AFORESAID PROVISOS BY NO MEANS JEOPARDIZES THE ENTITLEMENT OF AN ASSESSEE TO CLAIM DEDUCTION OF THE INTEREST PAYABLE BY HIM ON THE CAPITAL BORROWED FOR ACQUIRING, CONSTRUCTING, REPAIRING, RENEWING OR RECONSTRUCTING A RESIDENTIAL PROPERTY THAT DOES NOT FALL WITHIN THE REALM OF SUB - SECTIO N (2) OF SEC. 23 OF THE ACT. ALSO, WE ARE UNABLE TO PERSUADE OURSELVES TO ACCEPT THE VIEW OF THE CIT(A) THAT AS IN THE ABSENCE OF ANY CONTROL/DOMAIN OVER THE PROPERTY IN QUESTION THE ASSESSEE WOULD NOT BE IN RECEIPT OF ANY INCOME FROM THE SAME, THEREFORE, ALLOWING OF DEDUCTION UNDER SEC. 24(B) QUA THE SAID PROPERTY WOULD BE BEYOND COMPREHENSION. WE ARE AFRAID THAT THE SAID VIEW OF THE CIT(A) IS ABSOLUTELY MISCONCEIVED AND IN FACT DIVORCED OF ANY FORCE OF LAW. INSOFAR THE DETERMINATION OF THE ANNUAL LETTABL E VALUE OF A PROPERTY IS CONCERNED, THE SAME AS PER SEC. 22 R.W SEC. 23 OF THE ACT IS DEPENDANT ON THE OWNERSHIP OF THE PROPERTY, IRRESPECTIVE OF THE FACT WHETHER THE ASSESSEE HAS TAKEN THE POSSESSION ITA NO.4831/MUM/2019 A.Y.2015 - 16 MR. ABEEZAR FAIZULLABHOY VS. CIT(APPEALS) - 28 6 OF THE SAME OR NOT. ALTHOUGH, AS PER THE PLAIN LITERAL INTERPRETATION OF SEC. 24(B) OF THE ACT THERE IS NO BAR ON AN ASSESSEE TO CLAIM DEDUCTION OF INTEREST PAYABLE ON A LOAN TAKEN FOR PURCHASING A RESIDENTIAL PROPERTY, THOUGH , THE POSSESSION OF THE SAME MIGHT NOT HAVE BEEN VESTED WITH HIM, HOWEVER, EVEN OTHERWISE THE LOGIC GIVEN BY THE CIT(A) FOR DECLINING THE AFORESAID CLAIM OF DEDUCTION OF THE ASSESSEE CLEARLY MILITATES AGAINST THE MANDATE OF SEC. 22 TO 24 OF THE ACT. A CCORDINGLY, AS IN THE CASE BEFORE US THE ASSESSEE HAD ADMITTEDLY PAID INTEREST OF RS. 2,69,842.12 ON THE CAPITAL THAT WAS BORROWED BY HIM FOR ACQUIRING THE PROPERTY IN QUESTION, WHICH WAS DULY EVIDENCED ON THE BASIS OF THE CERTIFICATE THAT WAS FILED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THEREFORE, WE A RE UNABLE TO CONCUR WITH THE LOWER AUTHORITIES WHO HAD DECLIN ED HIS AFORESAID CLAIM FOR DEDUCTION OF INTEREST UNDER SEC. 24(B) OF THE ACT. WE, THUS, NOT FINDING FAVOR WITH THE VIEW TAKEN BY THE CIT(A) THEREIN SET - ASIDE HIS ORDER AND DIRECT THE A.O TO ALLOW THE ASSESSEES CLAIM FOR DEDUCTION OF RS. 2 LAC UNDER SEC. 24(B) OF THE ACT. 8. THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRONO UNCED IN THE OPEN COURT ON 01 .09 .2021 SD/ - SD/ - ( M. BALAGANESH ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 01 .09 .2021 PS: ROHIT ITA NO.4831/MUM/2019 A.Y.2015 - 16 MR. ABEEZAR FAIZULLABHOY VS. CIT(APPEALS) - 28 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI