NEELKAMAL BUILDERS, MUMBAI V. ITO 12(1)(2), MUMBAI

ITA 6465/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2656 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 17-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 23-10-2012
• Court: TRIBUNAL
• Department Lawyers: M RAJAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI , . . , BEFORE SHRI JOGINDER SINGH, JM & SHRI R.C.SHARMA, AM ./ ITA NO. 64 65 / MUM/201 2 ( / ASSESSMENT YEAR : 200 7 - 20 08 ) M/S NEELKAMAL BUILDERS, 418, MAKER CHAMBER - V, NARIMAN POINT, MUMBAI - 400021 VS. ITO - 12(1)(2), MUMBAI ./ ./ PAN/GIR NO. : A A CFN 2796 C ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI BHUPENDRA SHAH /REVENUE BY : SHRI M. RAJAN / DATE OF HEARING : 5 TH AUGUST , 201 5 / DATE OF PRONOUNCEMENT 30 - 10 - 2015 / O R D E R PER R.C.SHARMA, AM TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , MUMBAI, DATED 31 - 8 - 2012 , FOR THE ASSESSMENT YEAR 200 7 - 08 , IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE IT ACT, AMOUNTING TO RS.2,81,323/ - . 2. RIVAL CONT ENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND BUILDING CONSTRUCTION ACTIVITIES. DURING THE PREVIOUS YEAR, IT HAD EARNED RENTAL INCOME FROM ITS OWN PROPERTIES WHICH HAVE BEEN DISCLOSED AS INCOME FROM HOUSE PROPERTY IN ITS RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE INCOME OF HOUSE PROPERTY WAS ITA NO. 6465 /M/1 2 2 COMPUTED AFTER DISALLOWING A CLAIM FOR DEDUCTION BEING INTEREST PAID ON LOAN OF RS. 8,35,407/ - . THE AO HELD THAT THE SAID INTEREST IS NOT DEDUCTIBLE IN COMPUTING THE HOUSE PROPERTY INCOME AS THE LOAN WAS NOT UTILIZED FOR THE ACQUISITION OF THE SAID PROPERTY. THE AO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT AND IMPOSED A PENALTY AT 100% OF THE TAX SOUGHT TO BE EVADED AMOUNTING TO RS.2,81,323/ - . 3. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ACTION OF THE AO, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD WE FOUND THAT PENALTY WAS LEVIED WITH RESPECT TO DISALLOWANCE OF ASSESSEES CLAIM FOR INTEREST AGAINST INCOME FROM HOUSE PROPERTY. THE ASSESSEE HAS INCURRED INTEREST EXPENDITURE AND CLAIMED THE SAME WHILE COMPUTIN G THE INCOME FROM HOUSE PROPERTY. THE AO FOUND THAT INTEREST WAS NOT PERTAINING TO THE AMOUNT BORROWED FOR THE PURPOSE OF PURCHASE OF HOUSE PROPERTY, THEREFORE, DISALLOWED ASSESSEES CLAIM WHILE COMPUTING INCOME FROM HOUSE PROPERTY. HOWEVER, INCURRING OF I NTEREST EXPENDITURE IS NOT IN DISPUTE, MERELY BECAUSE IT WAS NOT ALLOWED WHILE COMPUTING INCOME FROM HOUSE PROPERTY, THE SAME CANNOT BE MADE A REASON FOR LEVYING PENALTY U/S.271(1)(C) OF THE ACT. THE ASSESSEE HAS FURNISHED ALL THE PARTICULARS OF INCOME. ME RELY BECAUSE ASSESSEES CLAIM HAS BEEN DECLINED, THE SAME CANNOT BE MADE REASON FOR IMPOSING PENALTY AS PER THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS LTD. , 322 ITR 158. ACCORDINGLY, WE DO NOT FIND ANY MERIT FOR IMPOSITION OF PENALTY ITA NO. 6465 /M/1 2 3 WITH REGARD TO DISALLOWANCE OF CLAIM OF INTEREST WHILE COMPUTING INCOME FROM HOUSE PROPERTY. 5 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 /10 /2015 . 30 /10 /2015 SD/ - SD/ - ( ) ( JOGINDER SINGH ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 30 /10 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE C IT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//