Manik Singh, Noida V. DCIT, Circle-2, Noida

ITA 6469/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8046 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2015-2016
• Appeal Filed On: 08-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 37; 6; 56; 143(3)

Judgement Text

~ 1 ~ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.6469/DEL/2018 ASSESSMENT YEAR:2015-16 SHRI MANIK SINGH, S/O DR. MEHARBAN SINGH, A-47, SECTOR 31, NOIDA. PAN:AHJPS 6020 L VS. DY.C.I.T., CIRCLE-2, NOIDA. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LEARNED CIT(A) DATED 31/05/2018. IN THIS APPEAL THE ASSESSE E HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED DCIT ERRED IN LAW AND ON FACTS WHIL E PASSING THE ASSESSMENT ORDER ON 20/11/2017 U/S 143( 3) OF THE ACT AND HAS NOT JUSTIFIED IN REJECTING THE COMPUTAT ION MADE BY THE APPELLANT AND IN ESTIMATING THE INCOME BY APPLY ING ASSUMPTIONS AND PRESUMPTIONS AND WRONGLY DISALLOWED THE INTEREST PAID ON SECURE LOAN ON THE WRONG ASSUMPTIO N AS INVESTMENT IN HOUSE PROPERTY, SELF-RESIDENTIAL PUR POSE. 2. THE LEARNED AO ERRED IN LAW AND ON FACTS IN PASS ING THE ASSESSMENT ORDER U/S 143(3) OF THE ACT AS ERRONEOUS BASED ON ASSUMPTION AND PRESUMPTION AS INTEREST PAID ON S ECURED LOAN TAKEN FROM BANK FOR THE PURPOSE OF BUSINESS AN D INVESTED IN GIVING LOAN, HAS TO BE ALLOWED AS EXPENDITURE AG AINST THE APPELLANT BY SHRI ANKUR GOEL, ADVOCATE RESPONDENT BY MS. PRAMITA M. BISWAS, CIT (DR) DATE OF HEARING 18/04/2019 DATE OF PRONOUNCEMENT 18/04/2019 ~ 2 ~ INCOME FROM INTEREST. THE LD AO HAS ERRED ON FACTS AND IN LAW IN TREATING THE LOAN FOR CONSTRUCTION OF RESIDENTIA L HOUSE MERELY BECAUSE IT WAS SECURED AGAINST MORTGAGE OF RESIDENT IAL HOUSE. 3. ASSUMING WHILE DENYING THAT THE INCOME FROM INTE REST ON LOANS ADVANCED WHICH TO BE TAXED UNDER SECTION 5 6 AS INCOME FROM OTHER SOURCES, THE CORRESPONDING INTER EST PAID ON SECURED LOAN RAISED FROM BANK HAS TO BE ALLOWED AS DEDUCTION ON MATCHING PRINCIPLE. 4. THE LD A.O HAS ERRED ON FACTS AND LAW IN TREATIN G THE SECURED LOAN TAKEN FROM BANK AGAINST PROPERTY WRONG LY AS HOUSING LOAN FOR CONSTRUCTION OF HOUSE PROPERTY WHE N IT WAS NOT SO FACTUALLY. 5. THE LD AO HAS NO JURISDICTION UNDER SECTION 143( 3) TO CHANGE THE CHARACTER OF INTEREST EARNED AND INTERES T PAID ON THE SAME AMOUNT. 6. INDEPENDENT VERIFICATION WAS NOT CARRIED OUT BY THE LD AO WHEN THERE WAS A DOUBT ON THE CLAIM, IF ANY, AFT ER CONSIDERING THE EVIDENCE SUBMITTED BY THE APPELLANT WHICH IN THIS CASE WAS NOT CONSIDERED NECESSARY BY THE ASSES SING OFFICER AFTER EXAMINATION OF THE BOOKS OF ACCOUNT A ND RECORDS OF THE RELEVANT PERIOD. 2. THE BRIEF FACTS, AS NOTED IN THE ASSESSMENT ORDE R, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IT HAD TAKEN A HOUSIN G LOAN OF RS. TWO CRORE AND INSTEAD OF UTILIZING THE MONEY FOR HOUSING THE ASSESSEE ADVANCED THE AMOUNT TO M/S PROPLARITY INFRAVENTURE LTD. WHEREIN HE WAS A DIRECTOR. THE ASSESSEE EARNED INTEREST FROM THE COMPANY M/S PROPL ARITY INFRAVENTURE LTD. AGAINST WHICH HE CLAIMED THE DEDUCTION OF INTE REST PAID TO BANK U/S 57 OF THE ACT AND OFFERED THE BALANCE FOR TAXATION. T HE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD TAKEN LOAN FOR SELF-RESIDENTI AL PURPOSES AS MENTIONED IN THE SANCTION LETTER AND AS PER THE TER MS AND CONDITIONS OF SUCH LOAN, THE ASSESSEE WAS ENTITLED TO USE THIS AM OUNT FOR WHICH IT WAS SANCTIONED. THE ASSESSING OFFICER FURTHER HELD THA T THE ASSESSEE HAD INVESTED THE AMOUNT TAKEN AS ADVANCE FROM BANK IN T HE COMPANY WHICH WAS ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF RESIDENTIAL FLATS ~ 3 ~ THEREFORE, THE ASSESSING OFFICER FURTHER HELD THAT INSTEAD OF DEDUCTION U/S 57 OF THE ACT, THE ASSESSEE COULD HAVE CLAIMED DEDU CTION ONLY U/S 24(B) OF THE ACT AND THEREFORE, HE MADE THE DISALLOWANCE. T HE LEARNED CIT(A) THOUGH UPHELD THE ORDER OF THE ASSESSING OFFICER BU T HE HELD THAT SINCE IT HAD NOT MADE PURCHASE OF ANY PROPERTY THEREFORE, DE DUCTION U/S 24(B) WAS ALSO NOT AVAILABLE TO THE ASSESSEE. HE FURTHER HEL D THAT SINCE THE AMOUNT WAS NOT TAKEN FOR ANY BUSINESS PURPOSE THEREFORE, T HE ASSESSEE WAS ALSO NOT ENTITLED TO DEDUCTION U/S 37 OF THE ACT. AGGRI EVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. LEARNED A.R. INVITED OUR ATTENTION TO THE BANK S TATEMENT, PLACED AT PAGE 28 OF PAPER BOOK, AND SUBMITTED THAT ASSESSEE HAD TAKEN HOUSING LOAN ON 27/09/2013 AND ON 28/09/2013 THE EXACT AMOU NT WAS TRANSFERRED TO THE COMPANY AS UNSECURED LOAN ON WHICH THE ASSES SEE HAD EARNED INTEREST AND IN THIS RESPECT OUR ATTENTION WAS INVI TED TO PAGE 41 OF THE PAPER BOOK WHERE COPY OF COMPUTATION OF INCOME WAS PLACED. LEARNED A.R. SPECIFICALLY INVITED OUR ATTENTION TO THE FACT THAT INTEREST FROM THE COMPANY AMOUNTING TO RS.30,83,754/- WAS DECLARED BY THE ASSESSEE AGAINST WHICH THE INTEREST PAID TO BANK WAS CLAIMED AS DEDUCTION U/S 57 OF THE ACT. THEREFORE, IT WAS PRAYED THAT IT WAS NOT A CASE OF CLAIM U/S 24(B) OR 37 AND RATHER IT WAS A CLAIM OF EXPENSES U/S 57 OF THE ACT AND THEREFORE, IT SHOULD HAVE BEEN ALLOWED BY THE AUTHORITIES BELO W. 4. LEARNED D.R., ON THE OTHER HAND, SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT IT IS A FACT THAT THE ASSESSEE HAD OBTAINED HOUSING LOAN FROM AXIS BANK BUT THE PROCEEDS OF THE HOUSING LOAN WERE NOT UTILIZED FOR PURCHASING ANY HOUSING ASSET BUT I T WAS ADVANCED TO A COMPANY IN WHICH THE ASSESSEE WAS ALSO A DIRECTOR. THE ASSESSEE HAD DECLARED INTEREST INCOME FROM THE COMPANY WHICH IS APPARENT FROM PAGE ~ 4 ~ 41 OF THE PAPER BOOK WHERE A COPY OF COMPUTATION OF INCOME IS PLACED. AGAINST THE INCOME OF INTEREST, THE ASSESSEE HAD CL AIMED INTEREST EXPENDITURE WHICH HAS BEEN PAID TO THE BANK THEREFO RE, THE ASSESSEE HAD CLAIMED THE INTEREST EXPENDITURE AS EXPENSES UNDER THE HEAD INCOME FROM OTHER SOURCES U/S 57 OF THE ACT. THE AUTHORITIES BELOW HAVE IGNORED THIS ASPECT. THE ASSESSEE BEFORE THE LEARNED CIT(A) HAS SPECIFICALLY TAKEN A GROUND FOR ALLOWANCE OF CLAIM U/S 57(III) ON WHICH LEARNED CIT(A) HAS NOT GIVEN ANY FINDING. THEREFORE, WE DEEM IT APPROPRIA TE TO REMIT THE ISSUE BACK TO THE OFFICE OF LEARNED CIT(A) WHO SHOULD PAS S A SPEAKING ORDER ON THE SPECIFIC GROUND TAKEN BY THE ASSESSEE WHICH IS THE CLAIM U/S 57(III) OF THE ACT. NEEDLESS TO SAY THE ASSESSEE WILL BE PROV IDED REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 18/04/2019) SD/. SD/. ( H. S. SIDHU ) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:18/04/2019 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T.,