M/s. DLF Emporio Limited, New Delhi V. DCIT, New Delhi

ITA 5654/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4885 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 20-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAVEEN CHANDRA
• Assessee Lawyers: R S SINGHAVI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.5654/DEL./2014 (ASSESSMENT YEAR : 2010-11) M/S. DLF EMPORIO LIMITED, VS. DCIT, (FORMERLY KNOWN AS REGENCY PARK CIRCLE 15 (1), PROPERTY MANAGEMENT SERVICES PVT.LTD.) NEW DELHI. 9 TH FLOOR, DLF CENTRE, SANSAD MARG, NEW DELHI 110 001. (PAN : AACCR0093B) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI R.S. SINGHAVI & SATYAJIT GOEL, CA REVENUE BY : SHRI NAVEEN CHANDRA, CIT DR DATE OF HEARING : 28.08.2017 DATE OF ORDER : 30.08.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. DLF EMPORIO LIMITED (HEREINAFTER R EFERRED TO AS THE ASSESSEE COMPANY), BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 15.09.2014 PA SSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-XVIII, NEW DEL HI, FOR THE ASSESSMENT YEAR 2010-11 ON THE GROUNDS INTER ALIA T HAT :- 1. THAT LEARNED CIT(A) HAS GROSSLY ERRED IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE ITA NO.5654/DEL./2014 2 APPELLANT'S CASE IN CONFIRMING THE ADDITION OF RS.45,95,00,961/- MADE BY THE ASSESSING OFFICER IN RESPECT OF INTEREST PAID TO ICICI BANK TOWARDS LOAN TAKEN FOR THE PURPOSE OF, TO SUBSTITUTE AND REPAY T HE EXISTING LOAN TAKEN FOR THE PURPOSE OF CONSTRUCTION OF PROPERTY FROM DLF LIMITED AND DLF UNIVERSAL LIMITED BY HOLDING THAT THE SAME HAS BEEN TAKEN AFT ER COMPLETION OF THE PROPERTY AND HAS NOT BEEN TAKEN F OR THE PURPOSE OF RE-PAYMENT OF LOAN TAKEN FOR CONSTRUCTION / ACQUISITION OF THE PROPERTY. 2. THAT THE IMPUGNED ORDER DATED 15.09.2014 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX- (APPEALS)-XVIII, NEW DELHI IS BAD IN LAW AND WRONG ON FACTS. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN HOLDING THAT THE LOAN FR OM ICICI BANK WAS NOT OBTAINED FOR REPLACEMENT OF EXISTING LOANS ADMITTEDLY OBTAINED FOR CONSTRUCTION OF PROPERTY. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS MISINTERPRETED THE PROVISIONS OF LAW AND HAS MISAPPRECIATED THE FACTS ON RECORD TO ARRIVE AT HIS CONCLUSION. 5. THAT THE AMOUNT OF INTEREST PAID TO ICICI BANK IS ALLOWABLE U/S 24 OF THE INCOME TAX ACT, 1961. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE COMPANY HAS CLAI MED INTEREST AND FINANCIAL CHARGES AMOUNTING TO RS.48,41,62,322/ - WHICH INCLUDES RS.45,95,00,961/- AS INTEREST ON LOAN TAKE N FROM ICICI BANK. ASSESSEE COMPANY WAS CALLED UPON TO EXPLAIN AS TO WHY THE INTEREST EXPENSES PAID TO ICICI BANK SHOULD NOT BE DISALLOWED. ASSESSING OFFICER, FOLLOWING THE DECISION RENDERED BY CIT (A) IN ASSESSEES OWN CASE FOR AY 2009-10, DISALLOWED THE INTEREST ITA NO.5654/DEL./2014 3 EXPENSES TO THE TUNE OF RS.45,95,00,961/- AND MADE ADDITION THEREOF TO THE INCOME OF THE ASSESSEE UNDER THE HEA D INCOME FROM HOUSE PROPERTY. 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING AN APPEAL WHO HAS DISMISSED THE APPEAL BY FO LLOWING THE ORDER PASSED BY HIS PREDECESSOR IN AY 2009-10 WHICH WAS UNDER CHALLENGE BEFORE THE TRIBUNAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF CHALLENGING T HE IMPUGNED ORDER PASSED BY LD. CIT. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. LD. AR FOR THE ASSESSEE, BY RELYING UPON THE DEC ISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2009-10, AVAILABLE AT PAGES 32 TO 41 OF THE PAPER BOOK, AND ORDER PASSED BY LD. CIT (A) IN ASSESSEES OWN C ASE FOR AY 2011-12, AVAILABLE AT PAGES 9 TO 23 OF THE PAPER BO OK, CONTENDED THAT THE ADDITION MADE BY AO AND AFFIRMED BY LD. CI T (A) ON ACCOUNT OF INTEREST PAID TOWARDS LOAN TAKEN TO REPA Y THE EXISTING LOAN FOR THE PURPOSE OF CONSTRUCTION OF PROPERTY FR OM DLF LIMITED AND DLF UNIVERSAL LIMITED IS NOT SUSTAINABLE. ITA NO.5654/DEL./2014 4 6. FROM THE GROUNDS OF APPEAL, ARGUMENTS ADDRESSED BY LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE AP PEAL AND FACTS & CIRCUMSTANCES OF THE CASE, THE ONLY QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER THE ASSESSEE COMPANY HAS CLAIMED INTEREST PAYMENT OF RS.45,95,00,961/- QUA THE LOAN TAKEN FOR REPAYMENT OF THE OLD LOAN TAKEN FOR THE PURPOSE OF CONSTRUCTION OF THE PROPERTY FROM M/S. DLF LIMITED AND M/S. DLF UNIVERSAL LIMITED? 7. UNDISPUTEDLY, AS PER CBDT CIRCULAR NO.28 DATED 20.08.1969 IF THE LOAN TAKEN HAS BEEN USED EXCLUSIV ELY TO REPAY THE ORIGINAL/OLD LOAN FOR CONSTRUCTION/ACQUISITION OF T HE PROPERTY, INTEREST PAID ON THE SECOND LOAN WOULD BE ALLOWED A S DEDUCTION UNDER SECTION 24(1)(VI) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT). 8. COORDINATE BENCH OF THE TRIBUNAL WHILE DECIDING THE IDENTICAL ISSUE IN CONTROVERSY IN ASSESSEES OWN CA SE HELD AS UNDER:- 13. IN OUR OPINION, IN THE INSTANT CASE ALSO, IF T HE FACTS ARE PROVED TO THE SATISFACTION OF THE ASSESSI NG OFFICER THAT THE INTEREST HAS BEEN PAID ON FRESH LO ANS TAKEN FOR REPAYMENT OF ORIGINAL LOAN TAKEN FOR THE PURPOSE OF ACQUISITION/CONSTRUCTION OF THE PROPERTY , THEN SAME SHOULD BE ADMISSIBLE FOR DEDUCTION UNDER SECTION 24(B) OF THE ACT. THE LD. CIT (A) HAS ALSO IN PRINCIPLE ACCEPTED THAT FRESH LOAN TAKEN FOR THE REPAYMENT OF OLD TAKEN FOR CONSTRUCTION/ACQUISITION OF THE PROPERTY IS ADMISSIBLE UNDER SECTION 24(B) O F THE ACT, HOWEVER, HE HELD THAT IN THE INSTANT CASE ITA NO.5654/DEL./2014 5 FRESH LOAN TAKEN FROM THE ICICI BANK HAS NOT BEEN UTILIZED FOR REPAYMENT OF THE LOAN TAKEN FOR CONSTRUCTION/ACQUISITION OF THE PROPERTY. THE LD. COUNSEL SUBMITTED BEFORE US THE LD. CIT (A) HAS NOT ISSUED ANY NOTICE FOR ENHANCEMENT OF THE INCOME AND THE ASSESSEE HAS ALSO TAKEN ONE OF THE GROUND I N THE APPEAL BEFORE US. LD. COUNSEL SUBMITTED THAT H E WAS NOT HAVING OBJECTION IF THE MATTER WAS RESTORED BACK TO THE LD. CIT-(A). ON PERUSAL OF SANCTION LETTER ISSUED BY THE ICICI BANK, WHICH IS AVAILABLE ON PAGE 38 OF THE PAPER BOOK, WE FIND THAT THERE IS NO MENTION THAT THE LOAN WAS TAKEN FOR REPAYMENT OF OLD LOAN. IN THIS REGARD, THE LEARNED COUNSEL SUBMITTED THAT IN DETAILED APPLICATION FILED BEFORE THE BANK, THOSE FACTS WERE MENTIONED. ON PERUSAL OF THE PAGE 9 OF THE PAPER BOOK, WHICH IS LEDGER ACCOUNT O F DLF LTD. IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, WE FIND THAT ASSESSEE HAS RECEIVED LOANS DURING THE YEAR UNDER CONSIDERATION ALSO. THE LEDGER ACCOUNT O F ANOTHER PARTY IS ALSO AVAILABLE ON PAGE 10 OF THE PAPER BOOK. FROM THESE LEDGER ACCOUNTS, THE FACT THAT ENTIRE LOAN OF RS.340 CRORE TAKEN FROM THE ICICI BANK HAS BEEN UTILIZED TOWARDS REPAYMENT OF OLD LOANS FROM DLF LTD. AND DLF UNIVERSAL LTD., IS NOT GETTING VERIFIED. ASCERTAINING CORRECT FACTS IS ESSENTIAL FOR DECIDING AN ISSUE IN DISPUTE BEFORE U S. IN ABSENCE OF COMPLETE FACTS BEFORE US, WE CANNOT HOLD THAT THE NEW LOAN WAS USED TOWARDS REPAYMENT OF OLD LOAN UTILIZED IN ACQUISITION/CONSTRUCTION OF THE PROPERTY. 14. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FEEL IT APPROPRIATE TO RESTORE THE MATTER TO THE FILE OF THE LD. CIT-(A), FOR ISSUING A FRESH NO TICE OF ENHANCEMENT AND DECIDE AFRESH IN ACCORDANCE WITH LAW, AFTER VERIFYING THE LEDGER ACCOUNTS OF TH E PARTIES TO WHOM LOANS OF RS.340 CRORES HAVE BEEN REPAID DURING THE YEAR. THE LD. CIT-(A) MAY ALSO VERIFY FROM DAY-TO-DAY FUND FLOW STATEMENT OF RELEVANT PERIOD THAT OLD LOANS GIVEN WERE USED FOR ACQUISITION/CONSTRUCTION OF THE PROPERTY AND NOT FO R OTHER PURPOSES LIKE ADVERTISEMENT OR MARKETING PROMOTION ACTIVITY ETC. THE CLAIM OF THE ASSESSEE T HAT ITA NO.5654/DEL./2014 6 NEW LOAN WAS SANCTIONED FOR THE PURPOSE OF REPAYMENT OF OLD LOANS UTILIZED FOR ACQUISITION/ CONSTRUCTION OF THE PROPERTY, MAY ALSO BE VERIFIED FROM THE LENDER BANK. IT IS NEEDLESS TO MENTION TH AT ASSESSEE SHALL BE AFFORDED SUFFICIENT OPPORTUNITY O F HEARING ON THE ISSUE IN DISPUTE. THE GROUNDS OF TH E APPEAL ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 9. IDENTICAL ISSUE IN ASSESSEES OWN CASE HAS ALSO BEEN TAKEN CARE OF BY LD. CIT (A) BY DECIDING THE APPEAL FILED BY THE ASSESSEE COMPANY FOR AY 2011-12 BY ALLOWING THE SIMILAR DEDU CTIONS CLAIMED BY THE ASSESSEE. 10. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT THE ASSESSEE COMPANY IS ENTITL ED FOR DEDUCTION OF AMOUNT OF RS.45,95,00,961/- PAID AS INTEREST ON LOAN AVAILED OF FROM ICICI BANK TO REPAY THE OLD EXISTING LOAN TAKE N FOR THE PURPOSE OF CONSTRUCTION/ACQUISITION OF THE PROPERTY FROM M/S. DLF LIMITED AND M/S. DLF UNIVERSAL LIMITED, HOWEVER SUB JECT TO THE VERIFICATION OF THE FACTS BY THE AO. SO, WE HEREBY ALLOW THE APPEAL FILED BY THE ASSESSEE BY SETTING ASIDE THE IMPUGNED ORDER. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2017. SD/- SD/- (B.P. JAIN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH DAY OF AUGUST, 2017 TS ITA NO.5654/DEL./2014 7 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XVIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.