ITO, New Delhi V. M/s. Mac Overseas P Ltd., New Delhi

ITA 6293/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98016 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 18-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 27-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NOS. 2608/DEL/2011 & 6293/DEL/2013 ASSESSMENT YEARS: 2007-08 & 2009-10 INCOME TAX OFFICER, VS. M/S MAC OVESEAS P LTD., WARD 6(1), D-193, OKHLA INDUL. AREA, NEW DELHI PHASE-I, NEW DELHI 20 ROOM NO. 418A, (PAN: AADCM1175E) CR BUILDING, NEW DELHI I.T.A. NO. 4247/DEL/2013 ASSESSMENT YEAR: 2008-09 M/S MAC OVERSEAS PVT. LTD., VS. ITO, WARD 6(1), D-193, OKHLA INDUSTRIAL AREA, CR BUILDING, PHASE-I, NEW DELHI 20 NEW DELHI (PAN: AADCM1175E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL MATHUR, A.R. REVENUE BY : SHRI P. DAM KANUNJNA, SR. DR DATE OF HEARING ON : 26/11/2015 ORDER PRONOUNCED ON : 01/12/20 15 PER H.S. SIDHU, JM ORDER THESE APPEALS ARE FILED BY REVENUE AND ASSESSEE AGA INST THE SEPARATE ORDERS PASSED BY THE LD. CIT(A), NEW DELHI RELATING TO ASSESSMENT YEARS 2007-08; 2009-10 & 2008-09 RESPECT IVELY. SINCE THE ISSUES INVOLVED IN THESE APPEALS ARE COMMON AND IDENTICAL HENCE, 2 THEY ARE BEING CONSOLIDATED AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE, BY DEALING WITH ASSESSMENT YEAR 2007-08. 2. THE GROUNDS RAISED IN REVENUES APPEAL NO. 2608/ DEL/2011 (AY 2007-08) READ AS UNDER:- 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND CONTRARY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS. 20,10,453/- MADE U/S. 24(B) OF THE I.T. ACT, BY DIS ALLOWING THE INTEREST. 2.1 THE LD. CIT(A) IGNORED THE FACT THAT THE ASSESS EE WAS IN POSSESSION OF THE BUILD UP PROPERTY BEFORE TAKING L OAN ON WHCIH INTEREST WAS PAID. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF T HE HEARING. 3. THE GROUNDS RAISED IN REVENUES APPEAL NO. 6293 /DEL/2013 (AY 2009-10) READ AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWA NCE OF DEDUCTION OF RS. 17,04,030/- CLAIMED U/S. 24(B) WIT HOUT CONSIDERING THE FACT THE ASSESSEE FAILED TO ESTABLI SH THAT THE PAYMENT OF INTEREST IS IN RESPECT OF FUNDS BORR OWED FOR ACQUISITION OF ASSET FROM WHICH THE RENTAL INCOME H AS BEEN EARNED? 2. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AN D IS NOT TENABLE ON FACTS AND IN LAW. 3 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND OR FORGO ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 4. THE GROUNDS RAISED IN THE ASSESSEES APPEAL NO. 4247/DEL/2013 (AY 2008-09) READ AS UNDER:- 1. THE ORDER IS BAD IN LAW, AS IT HAS BEEN PASSED IN GROSS VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. 2. LD. AO HAS ERRED IN NOT ALLOWING THE DEDUCTION U/S. 24(B) OF INTEREST PAID ON BORROWED CAPITAL OF RS. 9,70,99 8/- AGAINST THE RENTAL INCOME UNDER HOUSE PROPERTY. 3. THE APPELLANT MAY BE PERMITTED TO ADD, ALTER O R AMEND ANY OF THE FOREGOING GROUNDS OF APPEAL. 5. THE BRIEF FACTS OF THE CASE ARE THAT RETURN OF INCOME WAS E-FILED BY THE ASSESSEE ON 25.10.2007. THE RETURN WAS PRO CESSED U/S. 143(1) AND SUBSEQUENTLY THE CASE WAS SELECTED FOR S CRUTINY THROUGH CASS. A NOTICE U/S. 143(2) OF THE ACT WAS ISSUED AND DULY SERVED UPON THE ASSESSEE. THE ASSESSEE DURING THE YEAR UN DER CONSIDERATION HAD EARNED INCOME FROM RENTING THE PREMISES AND ALS O FROM HIRING THE OFFICE EQUIPMENT, AIR CONDITIONERS, GENERATORS ETC. THE INCOME EARNED FROM THE AFORESAID SOURCES WAS SHOWN AS BUSINESS IN COME AND VARIOUS EXPENSES WERE CLAIMED AGAINST THE SAME. THE AO VIDE ORDER DATED 24.12.2009 PASSED U/S. 143(3) TREATED THE RENTAL IN COME AS INCOME FROM HOUSE PROPERTY AND HIRE CHARGES AS INCOME FRO M OTHER SOURCES. 4 6. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER, A SSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED O RDER DATED 31.1.2011 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND ALLOWED THE RELIEF OF RS. 20,10,453/- TO THE ASSESSEE. 7. LD. SR. DR RELIED UPON THE ORDERS PASSED BY THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL AND REQUESTED TO QUASH THE ORDER OF THE LD. CIT(A). 7.1 ON THE OTHER HAND, LD. A.R. HAS RELIED UPON TH E ORDER OF THE LD. CIT(A) AND REQUESTED THAT THE SAME MAY BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS, ESPECIALLY THE ORDER OF THE REVENUE AUTHORITIES. W E FIND THAT THE LD. CIT(A) HAS ELABORATELY DISCUSSED THE ISSUE IN DISPU TE. FOR THE SAKE OF CONVENIENCE, THE RELEVANT FINDINGS MENTIONED AT P ARA NO. 8.2 OF THE IMPUGNED ORDER IS REPRODUCED HEREUNDER:- 8.2 IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE AO HAS NOT ALLOWED INTEREST ON TERM LOAN AMOUNTING TO RS. 20,10,453/- WHICH THE APPELLANT HAD TAKEN FOR RENOVATION AND RECONSTRUCTION, AS DEDUCTION FROM INCOME FROM HOUSE PROPERTY. THE LD. AR SUBMITTED A COPY OF SANCTION LETTER OF TERM LOAN AND THE DETAIL S OF INTEREST CHARGED BY THE BANK. ON THE SANCTION LETT ER IS CLEARLY MENTIONED THAT THE LOAN WAS GRANTED FOR RENOVATION/ RECONSTRUCTION PURPOSES. I, THEREFORE, DO 5 NOT FIND ANY MERIT IN THE ACTION OF THE AO IN NOT ALLOWING THE SAME AS DEDUCTION U/S. 24(B) OF THE AC T. THE DISALLOWANCE BEING ERRONEOUS IS DIRECTED TO BE REVERSED. THE APPELLANTS GETS A RELIEF OF RS. 20,10,453/-. 8.1 AFTER PERUSING THE AFORESAID FINDING OF THE LD. CIT(A), IT IS NOT DISPUTED THAT ASSESSEE HAD TAKEN TERM LOAN FOR RENO VATION AND RECONSTRUCTION AND AO HAS NOT ALLOWED THE INTEREST ON TERM LOAN AMOUNTING TO RS. 20,109,453/-, AS DEDUCTION FROM HO USE PROPERTY. HOWEVER, AS PER THE COPY OF SANCTION LETTER AVAILAB LE ON RECORD, SHOWS THAT LOAN WAS GRANTED FOR RENOVATION/ RECONSTRUCTI ON PURPOSES, AND THEREFORE, THE ASSESSEE IS ENTITLED FOR DEDUCTION U /S. 24(B). THEREFORE, IN OUR CONSIDERED OPINION, THE LD. CIT(A) HAS RIGHT LY DIRECTED TO BE REVERSED THE SAME AND GAVE A RELIEF OF RS. 20,10,45 3/-, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE AFFIRM THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND DISMISS THE APPEAL OF THE REVENUE ACCORDINGLY. 8.2 WITH REGARD TO ITA NO. 6293/DEL/2013 (AY 2009-1 0) IS CONCERNED, SINCE WE HAVE DISMISSED THE APPEAL OF TH E REVENUE FOR THE ASSESSMENT YEAR 2007-08, AS AFORESAID, TAKING T HE CONSISTENT VIEW, THE ITA NO. 6293/DEL/2013 (AY 2009-10) FILED BY THE REVENUE ALSO STANDS DISMISSED. 6 9. AS REGARDS ASSESSEES ITA NO. 4247/DEL/2013 (AY 2008-09) IS CONCERNED, SINCE WE HAVE ALREADY DISMISSED THE REV ENUES APPEALS IN RESPECT OF THE ASSESSMENT YEARS 2007-08 & 2009-10 A S AFORESAID AND ALLOWED THE DEDUCTION TO THE ASSESSEE BY UPHOLDING THE ACTION OF THE LD. CIT(A), RESPECTFULLY FOLLOWING OUR AFORESAID DE CISION, WE ALLOW THE APPEAL OF THE ASSESSEE BEING ITA NO. 4247/DEL/2013 (AY 2008-09). 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE R EVENUE FOR THE ASSESSMENT YEARS 2007-08 & 2009-10 STAND DISMISSED AND ASSESSEES APPEAL FOR AY 2008-09 STANDS ALLOWED IN THE AFORESA ID MANNER. ORDER PRONOUNCED IN THE OPEN COURT ON 01/12/2015 . SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 01/12/2015 SRB COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES