Dy.C.I.T.,Circle-2, Gwalior V. Sh. Ashok Singh, Gwalior

ITA 66/AGR/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67428 (ITAT-AGRA)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-08-2013
• Assessment Year: misc
• Appeal Filed On: 04-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SHARMA
• Assessee Lawyers: V BAPNA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 66/AGRA/ 2013 ASSESSMENT YEAR 2009-2010 DEPUTY COMMISSIONER OF INCOME TAX VS. SHRI ASHOK S INGH, CIRCLE-1, 19A, GANDHI ROAD, GWALIOR GWALIOR (PAN AGFPS 7649 A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.D. SHARMA, JR. D.R. RESPONDENT BY : SHRI V.BAPNA, C.A. DATE OF HEARING : 07.08.2013 DATE OF PRONOUNCEMENT : 14.08.2013 ORDER PER A.L. GEHLOT,ACCOUNTANT MEMBER: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 07.12.2012 PASSED BY THE LEARNED CIT(A), GWALIOR FO R A.Y. 2009-10. 2. THE EFFECTIVE GROUNDS RAISED IN THIS APPEAL ARE REPRODUCED AS BELOW:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS .30,98,524/- MADE BY THE AO BY DISALLOWING INTEREST PAYMENTS U/S 57 OF IT ACT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS .3,27,348/- MADE BY THE AO AS INCOME FROM HOUSE PROPERTY. ITA NO.66/ AGRA./2013 A.Y. 2009-10 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DE RIVES INCOME BY WAY OF HOUSE PROPERTY AND OTHER SOURCES. DURING THE ASSESSMENT P ROCEEDINGS, A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED RS.34,92,697/- AS DEDUCTIO N FROM THE INCOME FROM OTHER SOURCES UNDER SECTION 57 OF THE I.T. ACT. AS PER DE TAILS FILED BY THE ASSESSEE, THE A.O. NOTICED THAT OUT OF TOTAL DEDUCTION OF INTERES T RS.34,92,697/- AN AMOUNT OF RS.30,98,524/- WAS PAID TO HDFC LTD. THE A.O. NOTIC ED THAT THE ASSESSEE HAS TAKEN LOAN FROM HDFC FOR CONSTRUCTION OF RESIDENTIA L PREMISES. SINCE THE LOAN WAS TAKEN FROM THE SAID BANK FOR CONSTRUCTION OF RE SIDENTIAL PREMISES, THEREFORE, THE INTEREST IS NOT ALLOWABLE AGAINST THE INCOME FR OM OTHER SOURCES. 4. THE ADDITION MADE BY THE A.O. HAS BEEN DELETED B Y THE CIT(A) AS UNDER:- (CIT(A) PAGE NO.8) I HAVE CONSIDERED THE WRITTEN SUBMISSION AND EVIDE NCE FURNISHED BY THE APPELLANT , IT IS SEEN FROM THE BA NK STATEMENT AND COPY OF ACCOUNT OF M/S ADHUNIK BUILDCON PVT. LTD. A ND M/S VIVSWAN HOTELS THAT FUNDS OF RS.2.5 CRORES SANCTIONED BY HD FC WERE UTILIZED TO GIVE ADVANCE TO M/S ADHUNIK BUILDCON PVT. LTD A ND M/S VIVASWAN HOTELS AS CONTENDED BY THE APPELLANT IN HIS WRITTEN SUBMISSION. THE APPELLANT HAS EARNED INTEREST INCOME FROM THESE ADV ANCES. THEREFORE, I AM OF THE CONSIDERED VIEW THAT THE ACTION OF THE A.O. OF DISALLOWING THE CLAIM OF THE APPELLANT U/S 57 IN RESPECT OF THE INTEREST PAID TO HDFC IS NOT SUSTAINABLE. THE INTEREST BEARING FUND BORROWED BY THE APPELLANT HAS BEEN UTILIZED FOR EARNING INTEREST IN COME, THEREFORE, THE CLAIM OF THE APPELLANT FOR DEDUCTION OF RS.30,98,52 4/- BEING THE AMOUNT OF INTEREST PAID TO HDFC IS ADMISSIBLE U/S 5 7. ACCORDINGLY, THE APPEAL OF THE APPELLANT IS ALLOWED. THE A.O. IS DIRECTED TO DELETE THE DISALLOWANCE MADE IN THIS REGARD. ITA NO.66/ AGRA./2013 A.Y. 2009-10 3 5. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. THE FACTS NOTED BY THE LD. CIT(A) ARE THAT THE LOAN WAS TAKEN FROM HDFC BANK BY THE ASSESSEE AGAINST MORTGAGE OF THE PROPERTY AND THE S AID LOAN WAS UTILIZED FOR GIVING ADVANCES TO ADHUNIK BUILDCON PVT. LTD. AND V IVASWAN HOTELS (INDIA) LTD. FROM WHICH THE ASSESSEE RECEIVED THE INTEREST. THE CIT(A) OBSERVED THAT THE A.O. WAS NOT CORRECT PRESUMING THAT THE LOAN FROM HDFC B ANK WAS TAKEN FOR CONSTRUCTION OF RESIDENTIAL HOUSE PROPERTY. IN FACT , THIS PROPERTY WAS MORTGAGED TO BANK TO OBTAIN THIS LOAN OF RS.2.5 CORRES, WHICH WA S GIVEN TO ADHUNIK BUILDCON PVT. LTD. AND VIVASWAN HOTELS (INDIA) LTD. FROM WH OM THE ASSESSEE RECEIVED THE INTEREST. THE CIT(A) WAS OF THE VIEW THAT SINCE THE BORROWED FUND WAS UTILIZED FOR GIVING LOAN AND EARNING INTEREST, THEREFORE, TH E INTEREST PAID IS DEDUCTABLE UNDER SECTION 57 OF THE ACT. THE FACTS NOTED BY THE CIT(A) HAVE NOT BEEN DISPUTED BY THE REVENUE. THUS, WE NOTICE THAT THE A SSESSEE HAS BORROWED FUND FROM HDFC BANK AND UTILIZED TO GIVE ADVANCE TO THE ADHUNIK BUILDCON PVT. LTD. AND VIVASWAN HOTELS (INDIA) LTD. AND ASSESSEE RECEI VED INTEREST FROM THESE ADVANCES. THE ASSESSEE IS ENTITLED TO CLAIM INTERES T PAID AGAINST THE INTEREST RECEIVED, WHICH IS IN ACCORDANCE WITH SECTION 57 OF THE ACT. IN THE LIGHT OF THESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A).THE ORDER OF THE CIT(A) IS CONFIRMED ON THE ISSUE. 6. THE SECOND GROUND RAISED BY THE REVENUE IS IN RE SPECT OF ADDITION OF RS.3,27,348/-. DURING THE ASSESSMENT PROCEEDINGS, T HE A.O. NOTICED THAT AS PER ITA NO.66/ AGRA./2013 A.Y. 2009-10 4 RENT AGREEMENT WITH THE MUTHOOTH FINANCE PVT. LTD. ASSESSEE WAS TO RECEIVE RENT OF RS.4,67,640/-, BUT IN COMPUTATION ASSESSEE HAS S HOWN ONLY RS.35,640/-. THE A.O. DID NOT ACCEPT THE ASSESSEES SUBMISSION ON TH E GROUND THAT THE ASSESSEE NEVER SUBMITTED FRESH COPY OF THE AGREEMENT. THE A. O., AFTER ALLOWING STANDARD DEDUCTION, MADE ADDITION OF RS.3,27,348/-. 7. THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION AN D DELETED THE ADDITION. THE CIT(A) NOTED THAT IN SUPPORT OF HIS CLAIM, THE ASSESSEE FURNISHED CERTIFICATE FROM MUTHOOT FIANNCE PVT. LTD. WHEREIN IT HAS BEEN ADMITTED THAT THE RENT WAS PAID TO THE ASSESSEE FROM JANUARY, 2007 TO JULY 200 7 ONWARDS. HOWEVER, THEY PAID ONLY RS.2,970/- PER MONTH SERVICE CHARGES FOR THE PERIOD FROM 01.02.2007 TO 31.03.2008 TOTALLING RS.41,580/-. THE CIT(A) HAS SA TISFIED THAT THE ASSESSEE DID NOT RECEIVE ANY RENTED INCOME FROM MUTHOOT FINANCE PVT. LTD. 8. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. THE FINDING OF THE CIT(A) IS BASED ON CONFIRMATION FILE D BY THE CONCERNED PARTY THAT THEY DID NOT PAY ANY RENT FROM AUGUST 2007 ONWARDS, ONLY SERVICE CHARGES WERE PAID, WHICH HAS BEEN OFFERED TO TAX BY THE ASSESSEE . THE REVENUE DID NOT CONTROVERT THE FACTS NOTED BY THE CIT(A). IN THE LI GHT OF THESE FACTS, WHEN THE ASSESSEE DID NOT RECEIVE ANY RENT FROM THE PARTIES, THEREFORE, THE ADDITION CANNOT BE MADE. WE FIND THAT THE CIT(A) HAS RIGHTLY DELETE D THE ADDITION. THE ORDER OF THE CIT(A) IS CONFIRMED. ITA NO.66/ AGRA./2013 A.Y. 2009-10 5 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT.) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY