C.Subramananyam Raju, Rajampet V. ITO, Kadapa

ITA 674/HYD/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3102 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 21-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: S RAMA RAO
• Keywords: Gift; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMEBR ITA NO.674/HYD/2009 ASSTT. YEAR 2005-06 C. SUBRAMANYAM RAJU, RAJAMPET (PAN NO.AESPC 7815 B) V/S. ITO, WARD-1, KADAPA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. RAMA RAO, ADVOCATE RESPONDENT BY : SMT. NIVEDITA BISWAS, DR O R D E R PER SHRI G.C. GUPTA, VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-0 6 IS DIRECTED AGAINST THE ORDER OF THE CIT (A). 2. THERE IS A DELAY OF 246 DAYS IN FILING THE PRESENT APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS FILED AN APPLICATION FOR CO NDONATION OF DELAY, EXPLAINING THE REASONS FOR THE DELAY IN FILING THE APPEAL. 3. WE HAVE HEARD THE PARTIES ON THIS ISSUE. WE FIND THA T THE ADVOCATE OF THE ASSESSEE COULD NOT FILE THE APPEAL IN TI ME DUE TO COMPLICATED HEALTH CONDITIONS OF HIS MOTHER. THE ASSESSEE CO NSULTED ANOTHER ADVOCATE AND GOT THE APPEAL PREPARED AND FIL ED BEFORE THE TRIBUNAL. IN THESE FACTS WE HOLD THAT IT IS A FIT CASE FO R CONDONATION OF ITA NO.674/HYD/2009 SHRI C.SUBRAMANYAM RAJU, RAJAMPET. 2 DELAY IN FILING THE PRESENT APPEAL BEFORE THE TRIBUN AL AND THE DELAY IS ACCORDINGLY CONDONED. 4. THE GROUNDS OF APPEAL NO.1 IS GENERAL IN NATURE A ND NEEDS NO ADJUDICATION. THE GROUNDS OF APPEAL NO.2 AND 3 OF THE ASSESSEE ARE AS UNDER: '2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN OBSERVING THAT THE ENTIRE AMOUNT OF RS.7,57,170/- B EING THE INTEREST PAID ON SBI TERM LOAN IS NOT ALLOWABLE AS A DEDUCTION. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE CLAIM OF INTEREST OF RS.7,57,170/- MADE FROM THE INCOME FROM HOUSE PROPERTY IS NOT CORRECT' THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ONLY SOURCE OF INCOME OF THE ASSESSEE IS INCOME FROM HOUSE PROPERTY AND THE ASSESSEE HAS INCURRED A TOTAL CONSTRUCTION COST OF RS.1.10 CRORE S DURING THE RELEVANT YEAR AND FOR THIS PURPOSE HAS RAISE D A LOAN OF RS.69.00 LAC AND ODD FROM STATE BANK OF INDIA. THE ON LY OBJECTION OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE HAS ALSO RECEIVED NR I GIFTS AND THEREFORE, THERE WAS NO NECESSITY TO RAISE THE SAID S BI TERM LOAN. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE L OANS WERE TAKEN PRIOR IN DATE FROM THE BANK AND THE NRI GIFTS WERE RECEIVED LATER ON AND THEREFORE, THE REASONING OF THE ASSESSING OFFICER HAS NO MERIT. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT TH E ONUS IS ON THE ASSESSEE TO PROVE THAT THE TERM LOAN RECEIVED FROM S BI WAS INVESTED IN THE CONSTRUCTION OF PROPERTY DURING THE YEA R WHICH THE ASSESSEE HAS FAILED TO DISCHARGE. SHE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE CIT (A). ITA NO.674/HYD/2009 SHRI C.SUBRAMANYAM RAJU, RAJAMPET. 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION. WE FIND THAT THE MATERIAL FACTS OF THE CASE ARE NOT IN DISPUTE. THE GENU INENESS OF THE TERM LOAN RECEIVED FROM SBI HAS NOT BEEN DOUBTED BY T HE REVENUE AUTHORITIES. THE PLEA OF THE ASSESSEE THAT THE LOANS WERE RAISED FROM SBI PRIOR IN DATE AND THE NRI GIFTS WERE RECEIVED LAT ER ON, COULD NOT BE CONTROVERTED BY THE REVENUE. WE FIND THAT MERELY BECA USE THE ASSESSEE HAS RECEIVED SOME NRI GIFTS AFTER THE RAISING OF T ERM LOAN FROM THE SBI, IT COULD NOT BE SAID THAT THE INTEREST O N BORROWING FOR CONSTRUCTION OF THE BUILDING WAS NOT AN ALLOWABLE DEDUC TION IN THE HANDS OF THE ASSESSEE. IN THE FACTS OF THE CASE WE HOLD THA T NO CASE OF DISALLOWANCE OF INTEREST FROM BORROWING FROM BANK COULD BE MADE OUT BY THE REVENUE AND ACCORDINGLY THE GROUNDS OF APPEAL N O.2 AND 3 ARE ALLOWED. 6. THE GROUNDS OF APPEAL NO.4 OF THE ASSESSEE ARE AS UNDE R: '4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING ADDITION OF RS.8,50,000/- ON ACCOUNT OF A WRONG ENT RY MADE IN THE BOOKS OF ACCOUNT BECAUSE OF A CLERICAL ERROR'. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THER E WAS NO ADMISSION ON BEHALF OF THE ASSESSEE FOR THE ADDITION OF RS.8.5 LAKHS ON ACCOUNT OF WRONG ENTRY MADE IN THE ACCOUNTS BOOK, DUE TO CLERICAL ERROR. HE SUBMITTED THAT THE ASSESSEE IS IN A POSITION TO SH OW THAT THE CREDIT OF RS.8.5 LAKHS DO FIND PLACE IN THE BANK ACCOUNT OF THE ASSESSEE. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMIT TED THAT THE ASSESSEE HAS ADMITTED THE IMPUGNED ADDITION BEFORE T HE ASSESSING OFFICER AND THEREFORE, THE DEPARTMENT WAS STOPPED FROM MAKING FURTHER INVESTIGATION. SHE SUBMITTED THAT THE ASSESSEE SH OULD HONOUR ITA NO.674/HYD/2009 SHRI C.SUBRAMANYAM RAJU, RAJAMPET. 4 ITS COMMITMENT BEFORE THE DEPARTMENT. SHE RELIED ON T HE ORDER OF THE ASSESSING OFFICER AND THE CIT (A). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THA T IN THE FACTS OF THE CASE IT SHALL BE IN THE INTEREST OF JUSTICE TO SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTI ON TO DECIDE THE ISSUE IN THIS GROUND OF APPEAL OF THE ASSESSEE DE NOVO AFTER ALLOWING THE ASSESSEE REASONABLE OPPORTUNITY OF HEARING. WE DIRECT ACCORDINGLY. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 06-07-2010. SD/- SD/- (CHANDRA POOJARI) (G.C. GUPTA) ACCOUNTANT MEMBER VICE-PRESIDENT PVV/SPS DATE: 6TH JULY, 2010. COPY FORWARDED TO: 1. SHRI C. SUBRAMANYAM RAJU, 5/123-A KOLIMI STREET, RAJAMPET 516115, KADAPA DISTRICT 2. THE INCOME TAX OFFICER, WARD-1, KADAPA 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) TIRUPATI 4. COMMISSIONER OF INCOME-TAX-RANGE-2, TIRUPATI 5 THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD.