Lilykutty John, Kottayam V. ITO, Kollam

ITA 557/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64738 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 19-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 25-10-2010
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: IYPE MATHEWCA
• Keywords: Opportunity of being heard; Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 557/COCH/2010 ASSESSMENT YEAR: 2007-08 LILLYKUTTY JOHN, PALAKAMANNIL HOUSE, VADAVATHOOR, KOTTAYAM. [PAN :AFDPJ 4588C] VS. THE INCOME TAX OFFICER, WARD-2, KOLLAM. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI IYPE MATHEW,CA REVENUE BY SHRI ABHIMANYU SINGH YADAV, JR. DR DATE OF HEARING 19/07/2012 DATE OF PRONOUNCEMENT 10/08/2012 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 28-07-2010 PASSED BY THE LD. CIT(A)-I, TRIVANDRUM AND IT RELATES TO T HE ASSESSMENT YEAR 2007-08. 2. IN THIS APPEAL, THE ASSESSEE IS ASSAILING THE DE CISION OF THE TAX AUTHORITIES IN RESTRICTING THE INTEREST EXPENDITURE CLAIMED AGAINS T THE RENTAL INCOME. 3. THE FACTS RELATING TO THE SAME ARE STATED IN BRI EF. THE ASSESSEE OWNS A BUILDING AT KUNDANOOR, KOCHI AND THE SAME WAS LET OUT TO M/S . BHAARTI AIR TEL LTD. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED A S UM OF RS. 67,34,250/- AS RENTAL INCOME, AGAINST WHICH AN INTEREST OF RS. 58,05,214/ - WAS CLAIMED AS DEDUCTION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED TWO CERTIFICATES FROM HDFC BANK IN SUPPORT OF THE INTEREST CLAIM. THE ASSESSI NG OFFICER NOTICED THAT INTEREST PAYABLE ON LOAN TAKEN FOR CONSTRUCTION OF THE BUILD ING WAS ONLY RS. 5,77,257/- AND ACCORDINGLY, THE ASSESSING OFFICER RESTRICTED THE D EDUCTION TO THE ABOVE SAID AMOUNT. I.T.A. NO. 557/COCH/2010 2 4. THE ASSESSEE CHALLENGED THE SAID DECISION OF THE ASSESSING OFFICER BEFORE THE LD. CIT(A). BEFORE THE FIRST APPELLATE AUTHORITY, IT W AS SUBMITTED THAT THE ASSESSEE HAD TAKEN TWO TYPES OF LOAN FROM HDFC BANK VIZ., A TER M LOAN FOR CONSTRUCTION OF PROPERTY TO THE TUNE OF RS. 84,81,113/- AND ANOTHER LOAN TO THE TUNE OF RS. 4,35,57,299/- UNDER THE RENT CAPITALISATION SCHEME. IT WAS FURTHER S UBMITTED THAT SOME PART OF LOAN TAKEN UNDER THE RENT CAPITALISATION SCHEME WAS AL SO UTILISED FOR THE CONSTRUCTION OF THE BUILDING. ACCORDINGLY, IT WAS PRAYED BEFORE LD CIT(A) THAT PROPORTIONATE AMOUNT OF INTEREST PAYABLE ON THE LOAN TAKEN UNDER RENT CAPI TALISATION SCHEME, WHICH RELATES TO THE AMOUNT USED FOR THE PURPOSE OF CONSTRUCTION SHO ULD BE ALLOWED AS DEDUCTION. HOWEVER, THE SAID PLEA WAS REJECTED BY THE LD. CIT( A) AND HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS AVAIL ED TWO TYPES OF LOAN VIZ., A TERM LOAN FOR CONSTRUCTION OF BUILDING AND ANOTHER TERM LOAN UNDER RENT CAPITALISATION SCHEME. ACCORDING TO THE ASSESSEE, A PART OF THE LOAN AVAIL ED UNDER RENT CAPITALISATION SCHEME WAS ALSO USED FOR THE PURPOSE OF CONSTRUCTION. WE NOTICE THAT, UNDER SEC. 24 OF THE INCOME TAX ACT, INTEREST PAYABLE ON THE BORROWED CA PITAL WHICH WAS USED FOR CONSTRUCTION OF THE BUILDING IS ALLOWABLE AS DEDUCT ION. THERE IS NO RESTRICTION THAT THE LOAN SHOULD HAVE BEEN AVAILED UNDER BUILDING LOAN SCHEME. IN OUR VIEW, IF THE ASSESSEE IS ABLE TO PROVE THAT ANY TYPE OF LOAN AVA ILED BY HIM IS USED FOR THE PURPOSE OF CONSTRUCTION; THE INTEREST PAYABLE ON THE SAID LOAN IS ALLOWABLE U/S 24 OF THE ACT. HENCE, IN THE INSTANT CASE, IF THE ASSESSEE IS ABLE TO PROVE THAT SHE HAS UTILISED THE PART OF LOAN AVAILED UNDER THE RENT CAPITALISATION SCHEM E WAS USED FOR THE PURPOSE OF CONSTRUCTION OF THE BUILDING, THEN THE PROPORTIONAT E INTEREST THEREON RELATABLE TO SUCH UTILISATION IS ALLOWABLE U/S. 24 OF THE ACT. HOWEV ER, WE MAKE IT CLEAR THAT IT IS THE RESPONSIBILITY OF THE ASSESSEE TO PROVE THAT THE SA ID CLAIM. HENCE, IN THE INTEREST OF NATURAL JUSTICE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES RE-EXAMINATION AT THE END OF THE ASSESSING OFFICER. WITH THIS OBSERVATION, WE S ET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSES SING OFFICER WITH A DIRECTION TO I.T.A. NO. 557/COCH/2010 3 EXAMINE THE CLAIM OF THE ASSESSEE IN ACCORDANCE WIT H LAW AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY O N 10-08-2012 SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 10TH AUGUST, 2012 GJ COPY TO: 1. LILLYKUTTY JOHN, PALAKAMANNIL HOUSE, VADAVATHOOR , KOTTAYAM. 2.THE INCOME TAX OFFICER,WARD-2, KOLLAM. 3.THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, TRIVAN DRUM. 4.THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN