Appeal details
Counselvise Citation
66521114 RSA 2014
Assessee PAN
Bench
Appeal Number
Duration Of Justice
9 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
20-02-2015
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Assessment Year
2007-2008
Appeal Filed On
19-05-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH C, BANGALORE BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NOS.665 & 666(BANG) 2014 (ASSESSMENT YEARS : 2007-08 & 2008-09) THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-7(1), BANGALORE APPELLANT VS M/S SUBRAMANIAN PLAZA, NO.1, SJR PRIMUS, IND.LAYOUT, 7 TH BLOCK, KORAMANGALA, BANGALORE-560 095 PAN NO.ABDFS5618J RESPONDENT REVENUE BY : DR. SHANKAR PRASAD, K. JCIT ASSESSEE BY : SHRI D.DEVARA J, CA DATE OF HEARING : 02-02-2015 DATE OF PRONOUNCEMENT : 20-02-2015 O R D E R PER SHRI ABRAHAM P GEORGE, AM: IN THESE APPEALS FILED BY THE REVENUE IT HAS RAIS ED COMMON GROUNDS OF WHICH GROUND NO.2 IS THE GRIEVANCE RAISED. THIS PARTICULAR GROUND NO.2 IS REPRODUCED HEREUNDER; 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) HAS NOT APPRECIATED THE FACT THA T AS PER BOARDS CIRCULAR NO.28 DATED 20-08-1969 THE ASSESSE E ITA NOS.665 & 666(B)/14 2 HAS TO PROVE TO THE SATISFACTION OF THE AO THAT THE SECOND BORROWAL HAS BEEN FULLY UTILIZED FOR THE PURPOSE OF REPAYMENT OF ORIGINAL LOAN. IN THE INSTANT CASE, TH E ASSESSEE HAS FAILED TO PROVE THAT THE ORIGINAL LOAN WAS TAKEN FOR THE PURPOSE OF CONSTRUCTION AND ALSO THAT THE NEW LOAN TAKEN WAS UTILIZED FOR THE PURPOSE OF REPAYMEN T OF THE ORIGINAL LOAN. 2. ASSESSEE A FIRM DERIVING INCOME FROM HOUSE PROP ERTY HAD FILED ITS RETURN FOR THE IMPUGNED ASSESSMENT YEAR CLAIMING DE DUCTION OF RS.1,47,985/- AND RS.1,47,689/- AS INTEREST ON BORR OWED FUNDS USED FOR CONSTRUCTION OF THE PROPERTY, INCOME FROM WHICH WAS OFFERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE CLAIM OF INT EREST WAS AGAINST A LOAN FROM HDFC BANK. AO DURING THE COURSE OF ASSES SMENT PROCEEDINGS SOUGHT THE ASSESEE HOW THE CLAIM WAS JUSTIFIED. RE PLY OF THE ASSESSEE WAS THAT THE LOANS WERE FIRST TAKEN FROM ONE M/S S.J.R BUILDERS FOR CONSTRUCTION OF THE BUILDING AND LATER WHEN HDFC BA NK SANCTIONED THE LOAN, IT WAS UTILIZED FOR PAYING OF THE LOAN FROM S .J.R.BUILDERS. RELIANCE WAS PLACED ON THE BOARDS CIRCULAR NO.28 DATED 20-0 8-1969. ASSESSEE ARGUED THAT INTEREST PAID ON LOANS USED FOR REPAYIN G ORIGINAL LOAN UTILIZED FOR CONSTRUCTION OF THE BUILDING WAS ALLOWABLE UNDE R SECTION 24(1)(VI) OF THE IT ACT. HOWEVER, THE LEARNED AO WAS NOT IMPRESSED. ACCORDING TO THE AO, M/S SJR BUILDERS & DEVELOPERS, WAS A SISTER CONCERN AND NOT A FINANCIAL INSTITUTION. SIMILAR DISALLOWANCES WERE MADE IN AY : 2009-10 ALSO, BASED ON WHICH THE ASSESSMENTS FOR THE IMPUGNED ASSESSMEN TS YEARS, WERE RE- ITA NOS.665 & 666(B)/14 3 OPENED. THEREFORE, ACCORDING TO HIM, THE DISALLOWA NCES MADE FOR AY: 2009- 10 WERE TO BE MADE IN THE IMPUGNED ASSESSMENT YEAR ALSO. ESPECIALLY SO, SINCE THE SANCTION LETTER FROM M/S HDFC BANK REFLEC TED THE LOANS TO HAVE BEEN SANCTIONED FOR RENTAL DISCOUNTING AND NOT FOR CONSTRUCTION OF THE BUILDING. 3. AGGRIEVED BY THE ADDITION OF THE INTEREST CLAIM ED U/S 24(B) OF THE IT ACT, ASSESSEE MOVED IN APPEAL BEFORE THE LEARNED CI T(A). 4. ARGUMENT OF THE ASSESSEE WAS THAT SIMILAR CLAIM MADE BY THE ASSESSEE FOR AY: 2009-10, THOUGH INITIALLY DISALLOW ED BY THE AO WAS ON ASSESSEES APPEAL ALLOWED BY THE LEARNED CIT(A). ASSESSEE ALSO POINTED OUT THAT THE IMPUGNED ASSESSMENTS WERE PURSUANT TO RE-O PENING UNDER SECTION 148 OF THE ACT AND SUCH A RE-OPENING WAS BASED ON T HE ASSESSMENT FOR AY: 2009-10, WHERE A SIMILAR DISALLOWANCE WAS MADE. TH E CIT(A)S FINDING THAT HIS PREDECESSOR HAD ALLOWED THE CLAIM OF THE ASSESS EE FOR AY: 2009-10 AND ALLOWED THE APPEALS OF THE ASSESSEE FOR THE IMPUGNE D ASSESSMENT YEAR. 5. NOW BEFORE US, LEARNED DR SUBMITTED THAT THE SE COND LOAN WAS NOT TAKEN FOR BUILDING PURPOSES AND THEREFORE, THE CLAI M OF INTEREST THEREON COULD NOT BE ALLOWED. 6. PER CONTRA, LEARNED AR SUBMITTED THAT THE ISSUE HAD REACHED THIS TRIBUNAL ON ASSESSEES APPEAL FOR THE AY: 2009-10 I N ITA NO.1295(B)/2013. PLACING RELIANCE ON THE ORDER DATED 10-10-2014 OF T HIS TRIBUNAL LEARNED AR ITA NOS.665 & 666(B)/14 4 SUBMITTED THAT THIS TRIBUNAL HAD CONFIRMED THE CIT( A)S ORDER DELETING THE DISALLOWANCE MADE UNDER SECTION 24(B) OF THE ACT. A COPY OF THE ORDER WAS PLACED ON RECORD. 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. IT IS NOT DISPUTED THAT THE IMPUGNED ASSESSMENTS WERE RE- ASSESSMENTS PURSUANT TO RE-OPENING UNDER SECTION 147 OF THE ACT . SUCH RE-OPENING WAS ON ACCOUNT OF THE ASSESSMENT DONE FOR ASSESSMENT YE AR 2009-10 WHERE A SIMILAR CLAIM UNDER SECTION 24(B) ON THE VERY SAME LOAN INTEREST WAS DISALLOWED. THE SAID ISSUE HAD REACHED THIS TRIBUN AL AND THIS TRIBUNAL HELD AS UNDER AT PARA-6 OF ITS ORDER DATED 10-10-20 14 IN ITA NO.1295(B)/2013. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED DR. WE ARE OF THE VIEW THAT THE CONTENTIONS PUT FO RTH BY THE REVENUE ARE WITHOUT ANY BASIS THE AO DISALLOWED IN TEREST CLAIMED AS DEDUCTION U/S 24(B) OF THE ACT ON THE GR OUND THAT THE LOAN AMOUNT AVAILED BY THE ASSESSEE FROM HDFC B ANK ON WHICH INTEREST WAS PAID, HAD NOT BEEN UTILIZED F OR THE CONSTRUCTION OF COMMERCIAL COMPLEX AND THEREFORE, D ID NOT FULFIL THE CONDITION OF HAVING BEEN USED FOR THE PU RPOSE OF CONSTRUCTION OF BUILDING. WITH REGARD TO THE CLAIM THAT THE SECOND LOAN AVAILED FROM HDFC BANK WAS USED TO REPA Y THE EARLIER LOAN TAKEN FROM SISTER CONCERN, THE AO TOOK THE VIEW THAT THE SECOND LOAN WAS TAKEN IN THE NAME OF ASSES SEE, BUT USED BY THE SISTER CONCERN FOR ITS OWN BUSINESS PUR POSES. IT IS THUS CLEAR THAT NEXUS BETWEEN FIRST AND SECOND L OAN ITA NOS.665 & 666(B)/14 5 CLEARLY EXISTS AND THE GROUND RAISED BY THE REVENUE GOES BEYOND THE FINDING OF THE AO. SUCH A CONTENTION BY THE REVENUE IS THEREFORE NOT SUSTAINABLE. IN THE GIVEN CIRCUMSTANCES, CIRCULAR NO.28 DATED 20-08-1969 WAS CLEARLY APPLICABLE TO THE CASE OF THE ASSESSEE. WE ARE THE REFORE OF THE VIEW THAT THE CIT(A) WAS FULLY JUSTIFIED IN DIR ECTING THE AO TO ALLOW THE ASSESSEES CLAIM OF DEDUCTION U/S 2 4(B) OF THE ACT. WE DO NOT FIND ANY GROUNDS TO INTERFERE WITH THE ORDER OF THE CIT(A) WHAT WE FIND IS THAT SUBSTRATUM FOR MAKING THE ADDI TION HAS DISAPPEARED FOR THE IMPUGNED ASSESSMENT YEAR DUE TO THE ORDER O F THE TRIBUNAL FOR ASSESSMENT YEAR 2009-10. WE THEREFORE, FIND NO RE ASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). 8. APPEALS OF THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH FEBRUARY, 2015. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (ABRAHAM P GEORGE) (ACCOUNTANT MEMBER) BANGALORE: D A T E D : 20-02-2015 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE ITA NOS.665 & 666(B)/14 6 AR, ITAT, BANGALORE
