KIRITIDEVI SACHHANAND TEJWANI, MUMBAI V. ITO 19(1)(1), MUMBAI

ITA 6734/MUM/2013

• Counselvise Citation: 673419914 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 21-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN V P
• Assessee Lawyers: B P PUROHIT
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 6734/M/2013 ASSESSMENT YEAR: 2009 - 10 SMT. KIRTIDEVI SACHHANAND TEJWANI, 601, PARAMOUNT TOWERS, PLOT NO.428, 15 TH ROAD, KHAR (W), MUMBAI 400 052. PAN: AABPT 2281K VS. THE INCOME TAX OFFICER - 19(1)(1), PIRAMAL CHAMBERS, MORARJEE MILL COMPOUND, LALBAUG, PAREL, MUMBAI 400 012 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI B.P. PUROHIT, A.R. REVENUE BY : SHRI ASGHAR ZAIN V.P., D.R. DATE OF HEARING : 16.04 .201 5 DATE OF PRONOUNCEMENT : 05.06. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED B Y THE ASSESSEE AGAINST THE ORDER DATED 01.11.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [(HEREINAFTER REFERRED TO AS CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009 - 10 . THE ASSESSEE, THROUGH THE GROUNDS OF APPEAL, HAS AGITATED THE ACTION OF THE LD. CIT(A) IN SUSTAINING INTEREST DISALLOWANCE OF RS.1,80,000/ - . 2. THE BRIEF FACTS ARE THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) OBSERVED THAT THE ASSESSEE HAD DEBITED AN INTEREST OF RS.1 , 97 , 400/ - AGAINST TH E INCOME FROM HOUSE PROPERTY IN THE NAME OF HIS MINOR CHILD SNEHA S. TEJWANI. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE ASSESSEE HAD TAKEN A LOAN OF RS.16,45,000/ - ON 02.04.08 FOR THE PURCHASE OF PROPERTY FROM SMT. SHANTIDEVI A. NATHANI . AN AMOUNT OF ITA NO.6734/M/2013 SMT. KIRTIDEVI SACHHANAND TEJWANI 2 RS.1,97,400/ - WAS DEDUCTED UNDER SECTION 24(B) FROM RENTAL INCOME. THE AO, HOWEVER, NOTED THAT THE ASSESSEE COULD NOT SUBMIT THE LOAN CONFIRMATIONS FROM SMT. SHANTIDEVI A. NATHANI. HE THEREFORE REJECTED THE EXPLANATION GIVEN BY THE ASSESSEE AND DISALLOW ED THE INTEREST EXPENDITURE OF RS.1,97,400/ - . 3. IN APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THE REQUIRED DETAILS AND CONFIRMATION FROM SMT. SHANTIDEVI A. NATHANI. THE LD. CIT(A) CALLED FOR A REMAND REPORT OF THE AO ON THE EVIDENCES/DETAILS SUBMITTED BY THE ASSESSEE. THE AO, IN THE REMAND REPORT, REPORTED THAT THE ASSESSEE DURING THE YEAR HAD PAID AN INTEREST OF RS.17,400/ - ONLY AND THAT THE REMAINING AMOUNT OF INTEREST WAS NOT PAID BY THE ASSESSEE DURING THE YEAR. THE AO OBSERVED THAT SIN CE THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING, HENCE THE CLAIM OF INTEREST OF RS.17,400/ - WOULD BE ALLOWABLE AND THE BALANCE SHOULD BE DISALLOWED. AFTER CONSIDERING THE REMAND REPORT, THE LD. CIT(A) HELD THAT SINCE THE ASSESSEE HAD PROVED THE TA KING OF LOAN ON INTEREST, HENCE INTEREST OF RS.1,97,400/ - WAS ALLOWABLE. HE, HOWEVER, OBSERVED THAT SINCE THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING, HENCE AS PER THE REPORT OF AO , THE AMOUNT ACTUALLY PAID DURING THE YEAR I.E. RS.17,400/ - WAS AL LOWABLE. HE THEREFORE DISALLOWED THE REMAINING AMOUNT OF RS.1,80, 000/ - . 4. THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED BEFORE US THAT THE ASSESSEE , AN INDIVIDUAL, HAS BEEN FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. HE HAS BROUGHT OUR ATTENTION TO THE A SSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT FOR A.Y. 2007 - 08 WHEREIN THE METHOD OF ACCOUNTING OF THE ASSESSEE HAS BEEN MENTIONED AS MERCANTILE. HE HAS FURTHER BROUGHT OUR ATTENTION TO THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT FOR A .Y. 2008 - 09, WHEREIN THE AO CHANGED THE ACCOUNTING METHOD OF THE ASSESSEE FROM MERCANTILE TO MIXED. HE HAS FURTHER SUBMITTED THAT WITHOUT POINTING OUT THAT HOW THE A O CAME TO THE CONCLUSION THAT THE ASSESSEE WAS FOLLOWING CASH ITA NO.6734/M/2013 SMT. KIRTIDEVI SACHHANAND TEJWANI 3 SYSTEM OF ACCOUNTING , TH E AO FOR THE YEAR UNDER CONSIDERATION HELD THAT THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTING. A PERUSAL OF THE ABOVE ORDERS SUBMITTED BY THE ASSESSEE REVEALS THAT THE ASSESSEE IS AN INDIVIDUAL AND IS NOT A BUSINESS PERSON. FOR THE EARLIER ASSESSM ENT YEARS, THE ONLY INCOME SHOWN BY THE ASSESSEE IS INCOME FROM OTHER SOURCES. HOWEVER, FOR THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAS SHOWN RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE HAS PROVED BEFORE THE LOWER AUTHORITI ES THAT THE ASSESSEE HAD TAKEN LOAN FOR THE PURCHASE OF PROPERTY UPON WHICH THE RENTAL INCOME HAD BEEN EARNED BY THE ASSESSEE. IN THE EARLIER ASSESSMENT YEARS, THE ASSESSEE HAD BEEN SHOWN TO HAVE BEEN FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING. THERE WAS NOTHING ON RECORD FOR THE AO TO ASSUME THAT THE ASSESSEE HAD BEEN FOLLOWING CASH SYSTEM OF ACCOUNTING FOR THE YEAR UNDER CONSIDERATION UNDER CONSIDERATION . THE LD. CIT(A) HAS CATEGORICALLY GIVEN A FINDING THAT SINCE THE ASSESSEE HAD TAKEN LOAN, THE IN TEREST EXPENDITURE WAS AN ALLOWABLE EXPENDITURE. WE DO NOT FIND ANY JUSTIFICATION IN THE ACTION OF THE LD. CIT(A) IN DISALLOWING THE PART OF THE INTEREST PAYABLE RELYING UPON THE ASSUMPTION OF THE AO THAT THE ASSESSEE WAS FOLLOWING CASH SYSTEM OF ACCOUNTI NG. WE THEREFORE DELETE THE DISALLOWANCE MADE BY THE LOWER AUTHORITIES AND DIRECT THE AO TO ALLOW THE FULL CLAIM OF INTEREST PAID/ PAYABLE OF RS.1,97,400/ - . 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS THEREFORE ALLOWED. ORDER PRONOUNCED IN TH E OPEN COURT ON 05.06. 201 5 . SD/ - SD/ - (R.C. SHARMA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 05.06.2015 . * KISHORE , SR. P.S. ITA NO.6734/M/2013 SMT. KIRTIDEVI SACHHANAND TEJWANI 4 COPY TO: THE APPEL LANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.