Sri Ashok Khurana, Lucknow V. Asstt. Commissioner of Income Tax, Lucknow

ITA 760/LKW/2013

• Counselvise Citation: 76023714 RSA 2013
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 20-05-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 26-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: D D CHOPRA
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 760/LKW/2013 ASSESSMENT YEAR: 2006 - 07 SHRI. ASHOK KHURANA B - 140, SECTOR C MAHANAGAR, LUCKNOW V. ASSTT. CIT RANGE IV LUCKNOW PAN: ADXPK7643M (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. D. D. CHOPRA, ADVOCATE RESPONDENT BY: SHRI. ALOK MITRA, D.R. DATE OF HEARING: 20 05 2014 DATE OF PRONOUNCEMENT: 27 05 2014 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON FOLLOWING GROUNDS: - 1 . BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN DISMISSING THE APPEAL OF THE APPELLAN T AND UPHOLDING THE ASSESSMENT ORDER DATED 14.11.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) /263 OF THE INCOME TAX ACT, 1961 ON THE DIRECTIONS OF INCOME TAX APPELLATE TRIBUNAL WHILE IGNORING THAT THIS LEARNED INCOME TAX APPELLATE TRIBUNAL WHILE DECIDIN G THE ISSUE OF PAYMENT OF INTEREST ON BORROWED CAPITAL U/S 24(2) OF THE ACT IN FAVOUR OF THE APPELLANT VIDE ORDER DATED 15.07.2011 IN ITA NO. 194/LKW/11 HAD ONLY DIRECTED THE ASSESSING OFFICER TO ALLOW PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 2 - : THE CLAIM OF THE ASSESSEE IF IT IS FOUND THAT THE ASSE SSEE IS ELIGIBLE FOR THE SAID CLAIM AS PROVIDED IN EXPLANATION BELOW TO SECOND PROVISO TO SECTION 24 OF THE ACT. 2 . BECAUSE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DISMISSING THE APPEAL OF THE APPELLANT AND UPHOLDING THE ASSESSMENT ORDER DATED 14.11.2011 AND IN DOING SO HAS FAILED TO APPRECIATE THAT THE ASSESSING OFFICER HAS GROSSLY ERRED IN DISALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION OF INTEREST ON LOAN U/S 24(2) OF THE ACT WHEN THE SAID ISSUE HAS ALREADY BEEN SETTLED IN FAVOUR OF THE ASSESSEE BY A SUPERIOR AUTHORITY VIZ. INCOME TAX APPELLATE TRIBUNAL AND THE ASSESSING OFFICER WAS ONLY DIRECTED TO SEE THAT THE CONDITIONS FOR ELIGIBILITY OF CLAIM OF DEDUCTION AS CONTAINED UNDER EXPLANATION TO SECOND PROVISO TO SECTION 24 OF THE ACT WERE MET BY - THE ASSESSEE. 3 . BECAUSE THE LEARNED C OMMISSIONER OR INCOME TAX (APPEALS) WHILE UPHOLDING THE ASSESSMENT ORDER HAS FAILED TO APPRECIATE THAT THE ASSESSING OFFICER IN RE - ADJUDICATING THE ISSUE OF CLAIM OF DEDUCTION OF PAYMENT O F INTEREST U/S 24(2) OF TH E ACT WHILE PASSING ASSESSMENT ORDER DATED 14.11.2011 HAS DISOBEYED THE ORDERS OF THE SUPERIOR AUTHORITY VIZ. INCOME TAX APPELLATE TRIBUNAL AND THEREFORE THE ASSESSMENT ORDER PASSED DESERVES TO BE DEPLORED. 4 . BECAUSE THE LEARNED INCOME TAX APPELLATE TRIBUNAL VIDE ORDER DATED 15.07.2011 IN ITA NO. 194/LKW/11 HAS ALREADY DECIDED THAT THE POSSESSION OF THE PROPERTY IS NOT NECESSARY TO CLAIM THE DEDUCTION OF INTEREST ON BORROWED CAPITAL U/S 24(2) OF THE ACT AND THE THEREFORE THE COMMISSIONER OF INCOME TAX (APPEAL S) HAS GROSSLY ERRED IN NOT INTERFERING WITH THE ORDER PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 3 - : PASSED BY THE ASSESSING OFFICER WHICH IS CONTRARY TO THE DIRECTIONS CONTAINED IN THE ORDER PASSED BY THE LEARNED INCOME TAX APPELLATE TRIBUNAL. 5 . BECAUSE THE EXPLANATION BELOW SECOND PROVISO TO SECTION 2 4(2) OF THE ACT PROVIDES FOR ALLOWING DEDUCTION OF INTEREST ON CAPITAL U/S 24(2) IN FIVE EQUAL INSTALLMENTS STARTING FROM THE YEAR DURING WHICH THE PROPERTY HAS BEEN ACQUIRED AS CONSTRUCTED WITH BORROWED CAPITAL AND THEREFORE ASSESSING OFFICER SHOULD HAVE ALLOWED 1/5 OF THE TOTAL CLAIM OF RS.1,55,948 . 00 IN THE YEAR UNDER CONSIDERATION AND THEN 1/5 IN THE SUCCEEDING FOUR FINANCIAL YEARS. 6 . BECAUSE THE ASSESSING OFFICER HAS GROSSLY ERRED IN PASSING THE ASSESSMENT ORDER DATED 14.11.2011 U/S 143(3)/263 OF THE ACT EVEN THOUGH THE SAID ORDER HAS BEEN MODIFIED BY THE LEARNED INCOME TAX APPELLATE TRIBUNAL VIDE ORDER DATED 15.07.2011 WHEREBY THE ORDER OF THE COMMISSIONER OF INCOME TAX U/S 263 DATED 14.02.2011 DIRECTING THE ASSESSING OFFICER TO DISALLOW THE CLAIM OF DED UCTION U/S 24 HAS BEEN NULLIFIED AND DIRECTION WERE GIVEN TO THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION IF THE ASSESSEE FULFILLS THE ELIGIBILITY PROVISIONS AS CONTAINED IN EXPLANATION TO SECOND PROVISO TO SECTION 24 OF THE ACT. 7 . BECAUSE THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN NOT APPRECIATING THE VERDICT OF THIS LEARNED INCOME TAX APPELLATE TRIBUNAL CONTAINED IN ORDER DATED 15.07.2011 VIZ THAT IT IS NOT NECESSARY FOR THE ASSESSEE TO TAKE POSSESSION OF THE PROPERTY FOR CLAIMING THE DEDUCTION OF INTEREST ON BORROWED CAPITAL AND HAS GONE AGAINST THE SAID ORDER BY H O LDING THAT THE CONSTRUCTION OF HOUSE WAS NOT PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 4 - : COMPLETED TILL 31.03.2006 (F.Y. 2005 - 06) THEREFORE, INTEREST ON BORROWED FUND UTILIZED IN CONSTRUCTION OF HOUSE IS NOT ALLOWABLE IN A.Y. 2006 - 07. 2 . THOUGH VARIOUS GROUNDS ARE RAISED, BUT THEY ALL RELATE TO THE DISALLOWANCE OF DEDUCTION OF INTEREST CLAIMED FOR A SUM OF RS.1,55,948/ - UNDER SECTION 24(B) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') W ITH RESPECT TO THE PROPERTY AT NOIDA ON THE GROUND THAT IT WAS NOT ACQUIRED DURING THE IMPUGNED ASSESSMENT YEAR. ASSESSEE HAS ALSO ASSAILED THE ORDERS OF THE AUTHORITIES BELOW ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT GIVEN TRUE EFFECT TO THE ORDER OF THE TRIBUNAL DATED 15.7.2011 IN ITS LETTER AND SPIRIT AND HAS ACCEDED HIS JURISDICTION WHILE DENYING THE CLAIM OF DEDUCTION OF INTEREST UNDER SECTION 24(B) OF THE ACT. 3 . THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT THE ASSESSMENT WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE ACT ON THE RETURNED INCOME OF RS.14,19,164/ - AND LATER ON IT WAS REVIEWED BY THE LD. COMMISSIONER OF INCOME - TAX - I, LUCKNOW AND FORWARDED HIS COMMENTS TO THE ASSESSING OFFICER THAT FROM THE MATERIAL AVAILABLE ON RECORD, THE PROPERT Y AT NOIDA WAS AT NO TIME DURING THE ASSESSMENT YEAR 2006 - 07 IN THE POSSESSION OF THE ASSESSEE AND IT WAS HANDED OVER TO THE ASSESSEE BY THE BUILDER ON 15.12.2006. THEREFORE , THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 24(B) OF TH E ACT. THE ASSESSING OFFICER WAS ALSO ASKED TO TAKE REMEDIAL MEASURES IN THIS REGARD. CONSEQUENTLY A PROPOSAL UNDER SECTION 263 OF THE ACT WAS SENT TO THE LD. COMMISSIONER OF INCOME - TAX - II, LUCKNOW TREATING THE ASSESSMENT ORDER PASSED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. CONSEQUENTLY, THE LD. COMMISSIONER OF INCOME - TAX - II, LUCKNOW PASSED AN ORDER UNDER SECTION 263 OF THE ACT CANCELLING THE ASSESSMENT ORDER. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 5 - : 4 . AGGRIEVED WITH THE ORDER PASSED UNDER SECTION 263 OF THE ACT, THE ASSES SEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL WHILE SETTING ASIDE THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX, MODIFIED THE DIRECTIONS AND DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE IF IT IS FOUND THAT THE ASSESSEE IS ELIGIBLE FOR THE SAID CLAIM AS PROVIDED UNDER EXPLANATION BELOW THE SECOND PROVISO TO SECTION 24 OF THE ACT. WHILE ISSUING THE DIRECTION, THE TRIBUNAL HAS GIVEN A SPECIFIC FINDING THAT THE PROPERTY WAS ACQUIRED BY THE ASSESSEE IN THE YEAR UNDER CONSID ERATION . 5 . WHILE PASSING THE CONSEQUENTIAL ORDER, THE ASSESSING OFFICER HAS RE - EXAMINED THE CLAIM OF THE ASSESSEE IN THE LIGHT OF EXPLANATION BELOW THE SECOND PROVISO TO SECTION 24 OF THE ACT AND HAS DENIED DEDUCTION UNDER SECTION 24(B) OF THE ACT ON THE GRO UND THAT THE ASSESSEE DID NOT ACQUIRE THE PROPERTY WITHIN THE IMPUGNED FINANCIAL YEAR AND THE PROPERTY WAS UNDER CONSTRUCTION. 6 . AGGRIEVED , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), BUT HE DID NOT FIND FAVOUR WITH HIM. 7 . NOW THE ASSESSEE IS BEFOR E THE TRIBUNAL. 8 . DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. COUNSEL FOR THE ASSESSEE, SHRI. D. D. CHOPRA, ADVOCATE HAS INVITED OUR ATTENTION TO 6.2 OF THE ORDER OF THE TRIBUNAL DATED 15.7.2011 WHERE IN THE TRIBUNAL HAS GIVEN A CATEGORICAL FINDING TH AT THE PROPERTY WAS ACQUIRED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION AND IT WAS NOT NECESSARY TO HAVE THE POSSESSION OF THE PROPERTY FOR CLAIMING THE DEDUCTION OF I NTEREST ON THE BORROWED CAPITAL. THEREAFTER, DIRECTION WAS GIVEN TO THE ASSESSING O FFICER TO ALLOW THE CLAIM OF THE ASSESSEE IF OTHER REQUISITE CONDITIONS ARE FULFILLED. THEREFORE, THE SCOPE AVAILABLE WITH THE ASSESSING OFFICER IS VERY LIMITED. HE WAS REQUIRED TO CALCULATE THE QUANTUM OF INTEREST AND TO ALLOW INSTAL L MENTS PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 6 - : AS PROVIDED I N EXPLANATION BELOW THE SECOND PROVISO TO SECTION 24 OF THE ACT IN THE PREVIOUS YEARS AND ALSO FOR IMMEDIATELY SUCCEEDING FOUR YEARS. 9 . SHRI. D. D. CHOPRA, LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE ORDER OF THE TRIBUNAL WAS NOT CHALLENGED BY THE REVENUE, THEREFORE, THE FINDINGS GIVEN BY THE TRIBUNAL WITH REGARD TO THE ACQUISITION OF THE PROPERTY ATTAINED FINALITY AND THE ASSESSING OFFICER HAS NO JURISDICTION TO QUESTION THE ACQUISITION OF THE PROPERTY BY THE ASSESSEE IN THE YEAR UNDER CONSIDER ATION. BY RE - EXAMINING THE CLAIM OF THE ASSESSEE WITH REGARD TO THE DATE OF ACQUISITION OF PROPERTY, THE ASSESSING OFFICER HAS ACCEDED HIS JURISDICTION AND HAS NOT ACTED AS PER THE DIRECTION OF THE TRIBUNAL. THEREFORE, THE ASSESSING OFFICER MAY BE DIRECT ED TO ALLOW THE CLAIM OF THE ASSESSEE AS PER LAW BY DETERMINING THE AMOUNT OF INTEREST ALLOWABLE AS DEDUCTI O N UNDER SECTION 24(B) OF THE ACT. 10 . THE LD. D.R., ON THE OTHER HAND, HAS SUBMITTED THAT THE TRIBUNAL HAS ALSO GIVEN A DIRECTION TO THE ASSESSING OFFIC ER TO ALLOW THE CLAIM OF THE ASSESSEE IF IT IS FOUND THAT THE ASSESSEE IS ELIGIBLE FOR THE SAID CLAIM AS PROVIDED IN EXPLANATION BELOW THE SECOND PROVISO TO SECTION 24 OF THE ACT, MEANING THEREBY THE ASSESSING OFFICER WAS GIVEN LIBERTY TO RE - EXAMINE THE CL AIM OF THE ASSESSEE IN THE LIGHT OF THE EXPLANATION BELOW THE SECOND PROVISO TO SECTION 24 OF THE ACT. THEREFORE, THERE IS NO INFIRMITY IN THE ORDER OF THE ASSESSING OFFICER AND THE LD. CIT(A). 11 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW AND THE ORDER OF THE TRIBUNAL DATED 15.7.2011, WE FIND THAT THE CONTROVERSY WITH REGARD TO THE DATE OF ACQUISITION OF PROPERTY AT NOIDA WAS SET AT REST BY THE TRIBUNAL BY GIVING A CATEGORICAL FINDING THAT THE PROPERT Y WAS ACQUIRED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION AND IT WAS NOT NECESSARY TO HAVE POSSESSION OF THE SAID PROPERTY FOR CLAIMING DEDUCTION OF INTEREST ON BORROWED CAPITAL. PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 7 - : FOR THE SAKE OF REFERENCE, WE EXTRACT PARA NO.6.2 OF THE ORDER OF THE T RIBUNAL DATED 15.7.2011 AS UNDER: - 6.2. IN THE INSTANT CASE SINCE THE ASSESSEE MADE THE PAYMENT OF RS.45,00,000/ - ON 11.5.2005 TO THE BUILDER M/S A.T.S. INFRASTRUCTURE LTD. AND THE PROPERTY WAS ACQUIRED BY HIM IN THE YEAR UNDER CONSIDERATION AND IT WAS NO T NECESSARY TO HAVE THE POSSESSION OF THE SAID PROPERTY FOR CLAIMING THE DEDUCTION OF INTEREST ON THE BORROWED CAPITAL, THE INTEREST PART ON THE BORROWED CAPITAL FOR ACQUIRING THE PROPERTY CAN BE ALLOWED IN EQUAL INSTALLMENTS FOR THE SAID PREVIOUS YEARS AN D ALSO FOR IMMEDIATELY SUCCEEDING FOUR YEARS AS PER THE PROVISIONS CONTAINED IN EXPLANATION BELOW THE SECOND PROVISO TO SECTION 24 OF THE ACT. WE, THEREFORE, MODIFY THE ORDER OF THE LEARNED CIT AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE AS SESSEE IF IT IS FOUND THAT THE ASSESSEE IS ELIGIBLE FOR THE SAID CLAIM AS PROVIDED IN EXPLANATION BELOW THE SECOND PROVISO TO SECTION 24 OF THE ACT. 12 . UNDISPUTEDLY , THIS ORDER OF THE TRIBUNAL WAS NOT CHALLENGED BY THE REVENUE. THEREFORE, IT ATTAINED FINALI TY. IN PARA 6.2 OF ITS ORDER DATED 15.7.2011 THE TRIBUNAL HAS GIVEN A CATEGORICAL FINDING THAT THE PROPERTY IN QUESTION WAS ACQUIRED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION AND IT WAS NOT NECESSARY TO HAVE POSSESSION OF THE SAID PROPERTY FOR CLAIM ING DEDUCTION OF INTEREST ON BORROWED CAPITAL. IN THE LIGHT OF THESE FACTS, THE ASSESSING OFFICER HAS NO JURISDICTION TO RE - EXAMINE THE DATE OF ACQUISITION OF THE PROPERTY BY THE ASSESSEE , T HOUGH HE MAY BE DIRECTED TO EXAMINE THE POINT OF THE ELIGIBILITY OF THE SAID CLAIM AS PER EXPLANATION BELOW SECOND PROVISIONS TO SECTION 24 OF THE ACT, AS THE DATE OF ACQUISITION OF THE PROPERTY IS BEYOND THE SCOPE OF HIS ENQUIRY . EXCEPT THIS ISSUE, THE ASSESSING OFFICER IS EMPOWERED TO EXAMINE OTHER ASPECTS WHILE ALLO WING THE CLAIM OF DEDUCTION UNDER SECTION 24(B) OF THE ACT. BUT THE ASSESSING PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ ) : - 8 - : OFFICER HAS ACCEDED HIS JURISDICTION AND HAS DISTURBED THE FINDINGS OF THE TRIBUNAL BY GIVING HIS OWN FINDING THAT THE PROPERTY WAS NOT ACQUIRED WITHIN THE YEAR UNDER CONSIDERAT ION. THEREFORE, ACCORDING TO US, THE FINDING OF THE ASSESSING OFFICER IN THIS REGARD IS CONTRARY TO THE FINDING OF THE TRIBUNAL AND WE ACCORDINGLY SET ASIDE THE SAME. HE IS ONLY REQUIRED TO ALLOW DEDUCTION UNDER SECTION 24(B) OF THE ACT , IF THE ASSESSEE IS FULFILLED OTHER REQUISITE CONDITIONS AS PER EXPLANATION BELOW THE SECOND PROVISO TO SECTION 24 OF THE ACT WITHOUT DISTURBING THE FINDING OF THE TRIBUNAL WITH REGARD TO THE ACQUISITION OF THE PROPERTY IN THE YEAR UNDER CONSIDERATION. THE VIEW OF THE ASS ESSING OFFICER WAS APPROVED BY THE LD. CIT(A), TO WHICH WE DO NOT AGREE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 24(B) OF THE ACT AS PER LAW WITHOUT DISTURBING THE FINDING OF THE T RIBUNAL VIDE ITS ORDER DATED 15.7.2011 WITH REGARD TO THE ACQUISITION OF THE PROPERTY , . 13 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27.5.2014. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH MAY , 2014 JJ: 2105 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR PRINT TO PDF WITHOUT THIS MESSAGE BY PURCHASING NOVAPDF ( HTTP://WWW.NOVAPDF.COM/ )