Appeal Details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 8195 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 1 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-02-2017
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
E
Next Hearing Date
09-04-2015
Assessment Year
2008-2009
Appeal Filed On
31-12-2012
Judgement Text
ITA NO.7795/M/2012 DR. SANJAY J. MEHTA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.7795/MUM/2012 FOR (ASSESSMENT YEAR :2008-09) DR. SANJAY J. MEHTA, 49, C/O SHREENATHJI PLOYCLINIC, NEAR TEEN BATTI, RIDGE ROAD, MALABAR HILL, MUMBAI-400006 PAN: AFOPM8467J VS. ASSISTANT COMMISSIONER OF INCOME TAX -11(3)(3) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. PRAKASH JOT WANI WITH MS. MRUGAKSHI K. JOSHI ADVOCATES REVENUE BY : MS. BEENA SANTOS H (DR) DATE OF HEARING : 11.01.2017 DATE OF PRONOUNCEMENT : 15.02.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253(1) OF THE INCOME TAX ACT (ACT) IS DIRECTED AGAINST THE ORDER OF COMMISSIONER (APPEALS )-2, DATED 30.11.2012 FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS BASICAL LY RAISED TWO GROUNDS OF APPEAL: (1) THE LEARNED COMMISSIONER (APPEALS) ERRED IN CONFIRM ING THE DENIAL OF EXEMPTION UNDER SECTION 54F. IN ALTERNATIVE THE ASSESSEE RAISED GROUND THE LEARNED COMMISSIONER (APPEALS) FAILED TO TAKE I NTO CONSIDERATION THAT ANY ADDITION MADE IN THIS YEAR, WOULD AMOUNT TO DOUBLE TAXATION, SINCE THE APPELLANT HAS ALREADY VOLUNTARILY OFFERED THE EXEMP TED INCOME OF AY 2008-09 IN AY- 2011-12. ITA NO.7795/M/2012 DR. SANJAY J. MEHTA 2 (2) THE LEARNED COMMISSIONER (APPEALS) ERRED IN DISALLO WING RS. 12,28,883/- ON ACCOUNT OF INTEREST EXPENDITURE, AS THE LOAN IS UTI LIZED FOR THE PURPOSE OF EARNING INCOME. 2. THE BRIEF FACTS OF THE CASE ARE THAT FOR RELEVANT A SSESSMENT YEAR THE ASSESSEE FILED RETURN OF INCOME ON 25 OCTOBER 2008 DECLARING TOTAL INCOME AT RS. 26,49,878/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) O N 23 DECEMBER 2010. THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDER BE SIDES THE OTHER ADDITION AND DISALLOWANCE, DISALLOWED THE EXEMPTION OF INCOME C LAIMED UNDER SECTION 54F OF RS.3,96,96,640/- AND ALSO DISALLOWED A SUM OF R S. 12,28,883/- ON ACCOUNT OF INTEREST PAID TO ICICI HOME LOAN. ON APPEAL BEFORE COMMISSIONER (APPEALS) BOTH THE DISALLOWANCE WERE CONFIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) THE ASSESSEE HAS FILED PRESE NT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD AR FOR THE ASSESSEE AND THE LD DR FOR REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRST GROUND OF A PPEAL RELATES TO DENIAL OF EXEMPTION UNDER SECTION 54F. THE ASSESSEE IN ALTERN ATIVE RAISED THE GROUND THAT ASSESSEE HAS ALREADY VOLUNTARILY OFFERED THE EXEMP T INCOME OF ASSESSMENT YEAR 2008-09 TO TAX IN ASSESSMENT YEAR 2011-12. THE ASS ESSEE OFFERED THE LONG TERM CAPITAL GAIN TO TAX IN AY 2010-11, AS ASSESSEE CANC ELLED THE AGREEMENT DATED 10 SEPTEMBER 2008 ON 1 JUNE 2010. THE LD AR OF THE ASS ESSEE ARGUED THAT AS PER AGREEMENT DATED 2 ND APRIL 2004, THE ASSESSEE RECEIVED A SUM OF RS. 4.1 2 CRORE FROM NICOLAS PIRAMAL LTD ON ACCOUNT OF SLUMP SALE O F HIS PATHOLOGICAL BUSINESS. ON THE SALE OF ASSET THE ASSESSEE EARNED LONG-TERM CAPITAL GAIN OF RS.3,96,96,640/- THE ASSESSEE INVESTED THE SAID AMO UNT ON PURCHASE OF RESIDENTIAL FLAT ON 10.09.2008 AND CLAIMED EXEMPTION UNDER SECT ION 54F. THE ACTUAL AMOUNT OF RS.3,85,06,000/- WAS RECEIVED ,AS AN AMOUNT OF RS.26,94,000/-WAS FORFEITED AS PER CLAUSE 3.1.2 OF THE AGREEMENT DUE TO INADEQU ATE PROFIT ACHIEVEMENT. THE ASSESSING OFFICER DENIED THE EXEMPTION DUE TO THE I NCONSISTENCY OF DATES IN AGREEMENT TO SALE, BY VIRTUE OF WHICH THE ASSESSE E PURCHASED THE RESIDENTIAL FLAT. HOWEVER, THE ASSESSEE CANCELLED THE AGREEMENT VIDE CANCELLATION DEED DATED 1 ST JUNE 2010. THE ASSESSEE OFFERED THE CAPITAL GAIN FO R TAXATION IN ASSESSMENT ITA NO.7795/M/2012 DR. SANJAY J. MEHTA 3 YEAR 2011-12 WHICH HAS BEEN ACCEPTED BY THE REVENUE . IN SUPPORT OF HIS CONTENTION THE LD AR OF THE ASSESSEE PLACED ON RECO RD THE COPY OF ASSESSMENT ORDER UNDER SECTION 143(3) DATED 27 TH MARCH 2014. THE LD AR WOULD ARGUE THAT AS THE REVENUE HAS ALREADY TAXED THE SAME LONG TERM CAPITAL GAIN IN ASSESSMENT YEAR 2011-12, THUS, THE SAME CANNOT BE T AXED TWICE. ON THE OTHER HAND THE LD DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW AND WOULD ARGUE THAT THE REVENUE IS ENTITLED TO TAX THE INCOME IN THE YEAR OF ACCRUAL. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IS PLACED ON RECORD THE COPY OF CANCELLATION DEED DATED 1 JUNE 2010 (PAGE 27 TO 30 OF PB), CANCELLING THE AGREEMENT TO SALE / TRANSFER DEED DATED 10 SEPTEMB ER 2008, ON THE BASIS OF WHICH ASSESSEE CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT. WE HAVE SEEN THAT ASSESSEE HAS OFFERED THE CAPITAL GAIN FOR TAXA TION IN ASSESSMENT YEAR 2011- 12 AND THE SAME HAS BEEN ACCEPTED BY REVENUE IN ASS ESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 27 MARCH 2014. THUS, WE ACCEPT THE ALTERNATIVE GROUND OF APPEAL RAISED BY ASSESSEE REGARDING VOLUN TARILY OFFERING THE CAPITAL GAIN FOR TAXATION IN ASSESSMENT YEAR 2011-12. AS TH E REVENUE HAS ALREADY ACCEPTED THE LONG-TERM CAPITAL GAIN FOR TAXING IN A SSESSMENT YEAR 2011-12, HENCE, WE DIRECT THE AO TO VERIFY THE CORRECTNESS O F CLAIM OF ASSESSEE AND GRANT APPROPRIATE RELIEF. IN THE RESULT, THE ALTERNATIVE GROUNDS OF APPEAL RAISED BY ASSESSEE IN GROUND NO. 1 IS ALLOWED. 5. GROUND NO.2 RELATES TO DISALLOWANCE OF INTEREST OF RS. 12,28,883/-. THE LD AR OF THE ASSESSEE ARGUED THAT THE ASSESSEE HAS SHOWN INTEREST INCOME OF RS.28,13,663/- UNDER THE HEAD INCOME FROM OTHER S OURCES AND CLAIMED SET OFF UNDER SECTION 57 OF THE ACT. THE ASSESSEE PAID THE INTEREST OF RS. 19,89,771/-, WHICH CONSIST OF INTEREST TO PRIVATE PARTIES OF RS. 6,65,912/- AND INTEREST PAID TO ICICI HOME LOAN OF RS. 12,28,883/- WITH INTEREST ON ODS RS. 57,215/- ALONG WITH BANK CHARGES OF RS. 37,761/-. THE ASSESSEE PAID INT EREST TO ICICI HOME LOAN OF RS. 12,28,883/-WAS DISALLOWED BY AO. THE ASSESSEE E XPLAINED TO THE AO AS WELL AS TO LD COMMISSIONER(APPEALS) THAT ASSESSEE AVAIL ED LOAN FROM ICICI BANK FOR ITA NO.7795/M/2012 DR. SANJAY J. MEHTA 4 GIVING LOAN TO THE OUTSIDER ON WHICH THE ASSESSEE EARNED INTEREST OF RS.28,13,663/-. THE AO PRESUME THAT THE ASSESSEE AV AILS LOAN FOR PURCHASE OF FLAT. IN FACT THE ASSESSEE TOOK A LOAN FROM ICICI HOME LOAN AGAINST MORTGAGE OF HIS RESIDENTIAL FLAT. THERE IS NO CONDITION IN THE LOAN AGREEMENT THAT LOAN SANCTIONED BY THE BANK SHOULD BE UTILIZED FOR THE P URPOSE OF BUYING THE RESIDENTIAL FLAT ONLY, THE ASSESSEE WAS AT LIBERTY TO USE THE MONEY FOR WHICHEVER MEANS AS PER THE WISHES OF THE ASSESSEE. THE ASSES SEE AVAILED THE LOAN FOR EARNING INTEREST INCOME. ON THE OTHER HAND THE LD D R FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE ORDER OF AUTHORITIES BELOW. DURING THE ASSESSMENT A O NOTICE THAT ASSESSEE CLAIMED RS. 12,28,883/- AS INTEREST PAID TO ICICI HOME LOAN AND DEDUCTED FROM THE INCOME FROM OTHER SOURCES. THE ASSESSEE WAS ASKED AS TO WHY SUCH EXPENSES SHOULD NOT BE DISALLOWED. THE ASSESSE E FILED HIS REPLY DATED 20 FEBRUARY 2010 AND CONTENDED THEREIN THAT ASSESSE E HAD TAKEN LOAN FROM ICICI HOME LOAN DEPARTMENT AGAINST HYPOTHECATION OF HIS RESIDENTIAL HOUSE. THE LOAN WAS AVAILED FOR UTILIZING FOR THE PURPOSE OF EARNING INTEREST INCOME. THE REPLY OF THE ASSESSEE WAS NOT ACCEPTED BY AO. THE AO CONCLUDED THAT INTEREST EXPENSES ON SUCH LOAN MAY BE ALLOWED AS DE DUCTION UNDER SECTION 24(B) OF THE ACT, UNDER THE HEAD INCOME FROM HOUSE PROPERTY SUBJECT TO THE QUALIFYING THE OTHER CONDITIONS AND DISALLOWED THE CLAIM OF INTEREST EXPENSES. DURING FIRST APPEAL THE SIMILAR CONTENTIO N WAS URGED BEFORE COMMISSIONER (APPEALS). THE LD COMMISSIONER (APPEAL S) OBSERVED THAT THE ASSESSEE AVAILED LOAN OF RS.1,50,00,000/- FROM ICIC I BANK LTD AGAINST HIS FLAT. AFTER EXAMINING THE DETAILS OF THE ICICI BANK LOAN LD CIT(A) CONCLUDED THAT OUT OF THE SAID LOAN THE ASSESSEE AD VANCED LOAN TO 3 PARTIES NAMELY MANISH K. MEHTA, DR. VARSHA K. MEHTA AND DR S ANALYTICAL LABORATORY. OUT OF THE 3 PARTIES THE ASSESSEE RECEI VED INTEREST FROM 2 PARTIES NAMELY MANISH K. MEHTA (RS.4,68,714/-) AND DR ANALY TICAL LABORATORY (RS.12,14,000/-). THE LD CIT(A) FURTHER CONCLUDED T HAT MAJOR PART OF LOAN ITA NO.7795/M/2012 DR. SANJAY J. MEHTA 5 I.E. RS. 1,04,49,503/- WAS PAID ON 03.10.2007, RS.6 ,00,000/- WAS PAID ON 01.12.2007 AND RS.23,22,375/- ON 20.02.2008. THE ON LY OUTSTANDING LOAN AS ON 01.03.2008 IS ONLY 24,22,975/-.THUS, AT THE BEST , OUT OF RS.1,50,00,000/- THE ASSESSEE USED ONLY RS.10,00,000/- FOR EARNING I NTEREST. THE LD CIT(A) GIVEN PARTIAL RELIEF TO THE ASSESSEE BY GIVING DIRE CTION TO AO TO ALLOW THE INTEREST ON RS.10,00,000/- PAID TO ICICI BANK ON LO AN AS DEDUCTION. THE LD AR FOR THE ASSESSEE DURING HIS SUBMISSION NOT DISPU TED THE FACTUAL POSITION OBSERVED BY LD CIT(A) IN PARA 4.6 TO 4.9 OF HIS OR DER, NOR ANY FILED ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE HIS CLAIM. THU S, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY LD C IT(A). IN THE RESULT THE GROUND NO. 2 RAISED BY ASSESSEE IS DISMISSED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. NO ORDER AS TO COST. ORDER PRONOUNCED IN OPEN COURT ON 15 TH DAY OF FEBRUARY 2017. SD/- SD/- (RAJENDRA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 15/02/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/
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