Prabhat Kumar Sahu, New Delhi V. DCIT, New Delhi

ITA 5835/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8148 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 31-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R C DANJAY
• Assessee Lawyers: T R TALWAR
• Keywords: Depreciation; Revised return
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SH. LALIT KUMAR, JUDICIAL MEMBER ITA NO. 5 83 5 /DEL/2013 AY: 20 10 - 11 SH. PRABHAT KUMAR SAHU VS. DY.CIT, CIRCLE 37(1) D 247, SECOND FLOOR ROOM NO.2005 DEFENCE COLONY 20 TH FLOOR, BLOCK E - 2 NEW DELHI 110 024 AAYAKAR B HAVAN PAN: ABVPS 4940 B CIVIC CENTRE NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH. T.R.TALWAR, ADV. RESPONDENT BY : SH. R.C.DANJAY, SR.D.R. ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LD.COMMISSIONER OF INCOME TAX (APPEALS) - XXVI II, NEW DELHI DATED 13.08.2013 FOR THE ASSESSMENT YEAR 2010 - 11. 2. FACTS IN BRIEF: - THE ASSESSEE IS AN ADVOCATE BY PROFESSION. HE FILED HIS RETURN O F INCOME DECLARING INCOME OF 1,34,23, 410/ ON 30 . 09 . 2010. THE ISSUE BEFORE US IS THE DISALLOWANCE OF 50% OF INTEREST CLAIMED ON LOAN TAKEN FOR ACQUISITION OF PROPERTY AT DEFENCE ITA 5835/DEL/2013 A.Y. 2010 - 11 SH. PRABHAT KUMAR SAHU, NEW DELHI 2 C OLONY, NEW DELHI. THE ASSESSEE HAS DECLARED THIS PROPERTY AS AN ASSET OF HIS PROFESSION. AS 50% OF THIS PROPERTY WAS ONLY USED FOR PROFESSION, THE ASSESSEE FILED A REVISED RETURN RESTRICTING THE DEPRECIATION THAT WAS ORIGINALLY CLAIMED TO 50% OF SUCH CLA IM . AS FAR AS THE CLAIM OF INTEREST TAKEN ON LOAN FOR ACQUISITION OF THIS PROPERTY IS CONCERNED, IT WAS ARGUED THAT THE BALANCE 50% OF THE PROPERTY HAD REMAINED VACANT AND COULD NOT BE RENTED OUT AND NO INCOME COULD BE DERIVED THERE FROM. A LTERNATIVELY IT WAS ARGUED THAT NIL RENTAL I NCOME FROM HOUSE PROPERTY COULD HAVE BEEN DECLARED AND IN SUCH A SITUATION , IT WOULD HAVE RESULTED IN NEGATIVE INCOME FROM HOUSE PROPERTY, AFTER ALLOWING DEDUCTION OF THE SAID INTEREST EXPENDITURE ATTRIBUTABLE TO THIS 50% OF THE PROPERTY . THE A SSESSING O FFICER AS WELL AS THE LD. CIT(A) DID NOT AGREE WITH THE ASSESSEE . 3. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS. A. THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.20,000/ - ON THE GROUND THAT THE APPELLANT COULD NOT RECONCILE THE DIFFERENCE OF RS.20,000/ - WHEN THE APPELLANT HAD POINTED OUT THAT THIS WAS THE COMPUTATION ERROR COMMITTED BY HIM. THE AO HAD COMMITTED THIS ERROR IN QUOTING THE GENERAL EXPENSES CLAIMED AS RS.9,30,760/ - WHEREAS IT WAS R S.9,50,760/ - . THIS IS APPARENT IN PARA 3.1 OF HIS ORDER. B. THE CIT(A) SHOULD HAVE ALLOWED THE APPEAL AGAINST ADDITION OF RS.20,000. SHE HAS COMMITTED ERROR IN REMANDING THE MATTER TO THE ITA 5835/DEL/2013 A.Y. 2010 - 11 SH. PRABHAT KUMAR SAHU, NEW DELHI 3 AO TO VERIFY THE FIGURES AND ALLOW RELIEF, IF ADMISSIBLE, WHEN THE CIT(A) HAS NO POWER OF REMAND U/S 251(1)(A). C. THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF INTEREST OF RS.3,98,333/ - PAID ON LOAN FOR PURCHASING FLAT. D. THE CIT(A) HAS NOT NOTICED THAT THE AO HAD DISALLOWED INTEREST OF RS.3,98,333/ - PAID ON LOAN FOR PURCHASING FLAT ON THE FOOTING THAT THIS AMOUNT IS RELATABLE TO THE PORTION OF THE FLAT WHICH WAS USED FOR PERSONAL PURPOSES, WHEREAS ACTUALLY 50% OF THE FLAT WAS USED FOR RUNNING THE OFFICE AND THE BALANCE WAS VACANT DURING THE PERIOD. E. THE APPELLANT HAD ARGUED BEFORE THE AO AND THE CIT(A) THAT, IF THE VACANT PORTION IS RECKONED FOR INCOME FROM HOUSE PROPERTY, THE AMOUNT OF INTEREST OF RS.3,98,333/ - ATTRIBUTABLE TO THE VACANT PORTION OF THE FLAT WOULD RESULT IN LOSS OF RS.3,98,333. IF DONE SO, THE TOTAL INCOME WOULD REMAIN THE SAME, EVEN IF THE AMOUNT IS DISALLOWED AS EXPENSE FOR INCOME FROM PROFESSION. BOTH THE AO AND THE CIT(A) HAVE FAILED TO CONSIDER THIS ALTERNATIVE PLEA. 4 . WE HAVE HEARD SH. RC DANJAY, LD.SR.D.R. ON BEHALF OF THE REVENUE AND THE ASSESSEE SH.PRABHAT KR.SAHU HIMSELF REPRESENTED HIS CASE. 5. AFTER HEARING RIVAL CONTENTIONS, WE ARE CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE. IF THIS PROPERTY IS TAKEN AS AN ASSET OF THE PROFESSION , THEN THE INTEREST PAYABLE ON FUND S B O RROWED FOR THE ACQUISITION OF THIS PROPERTY HAS TO BE ALLOWED AS AN EXPENDITURE. IF 50% OF THIS PROPERTY IS NOT CONSIDERED AS AN ASSET OF THE PROFESSION, ITA 5835/DEL/2013 A.Y. 2010 - 11 SH. PRABHAT KUMAR SAHU, NEW DELHI 4 THEN IT WOULD BE THE PERSONAL ASSET OF THE ASSESSEE AND INCOME THE RE F ROM WOULD BE ASSESSABLE UN DER THE HEAD INCOME FROM HOUSE PROPERTY. AS THE ASSESSEE HAS NIL RENTAL INCOME DURING THE YEAR, HE WOULD HAVE GOT DEDUCTION OF INTEREST UNDER THE HEAD INCOME FROM HOUSE PROPERTY. 5 .1. IN OUR CONSIDERED VIEW, AS THIS IS AN ASSET OF THE PROFESSION, JUST BECAUSE 50% OF THE PROPERTY WAS ONLY USED FOR THE PROFESSION, INTEREST ATTRIBUTABLE TO THE BALANCE 50% OF THE PROPERTY CANNOT BE DISALLOWED U/S 36(1)(III) OF THE ACT. THUS WE ALLOW THESE GROUNDS OF THE ASSESSEE. 6 . IN THE RESULT THE APPEAL OF THE AS SESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH APRIL, 2016. SD/ - SD/ - (LALIT KUMAR) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 25 TH APRIL, 2016 MANGA ITA 5835/DEL/2013 A.Y. 2010 - 11 SH. PRABHAT KUMAR SAHU, NEW DELHI 5 COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR