Ajay S. Gupta, Pune V. Income-tax Officer,

ITA 975/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9507 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Business income; Notional interest
• Section: 143(3); 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI RAJESH KUMAR, AM . / ITA NO . 9 75 /P U N/201 5 / ASSESSMENT YEAR : 20 10 - 11 AJAY S. GUPTA, MZSK & ASSOCIATES, CHARTERED ACCOUNTANTS, LEVEL 3, RIVERSIDE BUSINESS BAY, PLOT NO. 84, WELLESLEY ROAD, NEAR RTO, PUNE 411001 PAN : AAVPG0570G . / APPELLA NT VS. INCOME TAX OFFICER, WARD 4(3), PUNE . / RESPONDENT / APPELLANT BY : S HRI RAJIV THAKKAR / RESPONDENT BY : MS. ANN KAPTHUAMA / DATE OF HEARING : 0 4 .05. 20 1 7 / DATE OF PRONOUNCEMENT: 05 . 0 5 .201 7 / ORDER PER RAJESH KUMAR, A M : TH E APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 3, PUNE DATED 16 - 02 - 2015 FOR THE ASSESSMENT YEAR 2010 - 1 1 ARISING OUT OF ASSESSMENT ORDER PASSED U/S. 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT). ITA NO . 975/PUN/2015 2 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT I T BE HELD THAT, REJECTING THE CLAIM OF HOUSING LOAN INTEREST OF R S. 1 ,50,000/ - OF THE APPELLANT IS IMPROPER, CONTRARY TO THE PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE. THE CLAIM SHOULD HAVE BEEN ADMITTED BY THE A O, WHILE ASSESSING THE INCOME IN TH E CASE OF THE APPELLANT. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 2. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHEME OF THE ACT IT BE HELD THAT, THE AMOUNT OF RS.18,000 / - ADDED BY THE A O AND CONFIR MED BY FIRST APPELLATE AUTHORITY PERTAINING TO THE NOTIONAL INTEREST ON RENT FREE DEPOSIT IS IMPROPER, CONTRARY TO THE PROVISIONS OF LAW AND FACTS PREVAILING IN THE CASE. NO SUCH ADDITION IS WARRANTED AS PER PROVISIONS OF LAW AND FACTS PREVAILING IN THE C ASE. THE ADDITION MADE BY THE A O AND CONFIRMED BY FIRST APPELLATE AUTHORITY OF RS.18,000 / - BE DELETED. THE APPELLANT BE GRANTED JUST AND PROPER RELIEF IN THIS RESPECT. 3. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, AMEND, MODIFY, RECTIFY, DELETE, RAISE ANY GROUNDS O F APPEAL AT THE TIME OF HEARING. 3. THE ONLY ISSUE RAISED IN GROUND NO. 1 BY THE ASSESSEE IS AGAINST THE UPHOLDING THE ORDER OF ASSESSING OFFICER REJECTING THE CLAIM OF INTEREST ON HOUSING LOAN OF RS.1,50,000/ - . 4. THE B RIEF FACT S OF THE CASE ARE THAT THE ASSESSEE HAS CLAIMED A SUM OF RS.1,50,000/ - ON ACCOUNT OF INTEREST ON HOUSING LOAN TAKEN FOR THE CONSTRUCTION OF BUNGALOW AT AUNDH WHICH WAS SELF OCCUPIED. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT COMPLETIO N CERTIFICATE DATED 28 - 02 - 2008 WAS NOT IN THE NAME OF ASSESSEE BUT IN THE NAME OF SHIVNARAYAN GUPTA AND CITING VARIOUS OTHER REASONS AS STATED IN PARA 5 OF THE ASSESSMENT ORDER. THE COMMISSIONER OF INCOME TAX (APPEALS) ALSO CONFIRMED THE ORDER OF ASSESSI NG OFFICER BY OBSERVING THAT THE ASSESSEE HAS FAILED TO PRODUCE NECESSARY EVIDENCES AND JUSTIFY THE CLAIM OF THE SAID INTEREST. ITA NO . 975/PUN/2015 3 5. THE LD. AR VEHEMENTLY SUBMITTED BEFORE US THAT THE PROPERTY WAS JOINTLY CONSTRUCTED BY BORROWING MONEY FROM CITIBANK BY DR AWING ATTENTION TO THE COPY OF LOAN AGREEMENT PLACED AT PAGES 113 TO 156 OF THE PAPER BOOK WHICH CONFIRMED THE LOAN HAVING TAKEN IN THE JOINT NAME OF THE ASSESSEE WITH HIS FATHER. . THE LD. AR ALSO BROUGHT TO THE ATTENTION TO THE BENCH TH AT THE CERTIFICATE OF INTEREST DATED 12 - 04 - 2010 ISSUED BY THE SAID BANK WHICH WAS ALSO ISSUED IN THE JOINT NAME OF AJAY SHIVNARAYAN GUPTA. THE LD. AR SUBMITTED THAT SINCE, THE HOUSE WAS CONSTRUCTED BY BORROWING MONEY JOINTLY AND BY INVESTING JOINTLY AND WAS USED AS A SELF OCCUPIED HOUSE , THE CLAIM OF THE ASSESSEE WAS WRONGLY DENIED. . THE LD. AR SUBMITTED THAT IN VIEW OF THESE FACTS THE COMMISSIONER OF INCOME TAX (APPEALS) GROSSLY ERRED IN UPHOLDING THE ORDER OF ASSESSING OFFICER AND PRAYED BEFORE THE BENCH TO ALLOW THE INT EREST AS CLAIMED BY THE ASSESSEE OF RS.1,50,000/ - U/S. 24(B) OF THE ACT. 6. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE THE BENCH INCLUDING THE O RDERS OF AUTHORITIES BELOW . WE FIND FROM THE RECORDS THAT THE ASSESSEE HA D JOINTLY BORROW ED MONEY WITH HIS FATHER AND ALSO INVESTED THE SAME AND HIS OWN MONEY ON THE CONSTRUCTION OF HOUSE USED FOR SELF OCCUPATION O F THE ASSESSEE. THE SAID PROPERTY WAS PUR CHASED ON 6TH JANUARY ,2003 AS PER THE SALE DEED FILED AT PAGE NO 1 TO 106 OF THE PAPER BOOK CONFIRMS THE JOINT PURCHASE OF THE PROPERTY BY THE ASSESSEE WITH HIS FATHER. IN VIEW OF THESE FACTS WE DO NOT AGREE WITH THE CO NCLUSION DRAWN BY THE COMMISSION ER OF INCOME TAX (APPEALS) AND THEREFORE, DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE. ACCORDINGLY, GROUND NO. 1 RAISED BY THE ASSESSEE IS ALLOWED. ITA NO . 975/PUN/2015 4 8. THE ISSUE RAISED IN GROUND NO. 2 IS AGAINST THE CONFIRMATION OF ADDITION OF RS.18 ,000/ - BY THE COMMISSIONER OF INCOME TAX (APPEALS) AS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF NOTIONAL INTEREST ON RENT FREE DEPOSIT. 9. THE FACTS ARE THAT THE ASSESSEE HAS OWN ED SHOP AT PRADHIKARAN, PUNE FORM WHICH THE ASSESSEE HAS SHOWN AN INCOME O F RS.58,343/ - . THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT NOTICED THAT THE ASSESSEE HAS RECEIVED A SUM OF RS.1,50,000/ - AS INTEREST FREE SECURITY AND ADDED RS.18,000/ - TO THE INCOME OF THE ASSESSEE BEING NOTIONAL INTEREST @ 12% ON THE SAID IN TEREST FREE SECURITY DEPOSIT. THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ACTION OF ASSESSING OFFICER ON THIS ISSUE BY OBSERVING THAT THE ASSESSEE HAS NOT FURNISHED ANY COPY OF THE RENT AGREEMENT CORROBORATING THE FACT THAT THE ASSESSEE WAS TO REC EIVE 14% OF THE NET REVENUE FROM THE SHOP AS PER TERMS OF AGREEMENT AND IT IS VERY CLEAR THAT THERE WAS NO FIXED RENT RECEIVED BY THE ASSESSEE. THE COMMISSIONER OF INCOME TAX (APPEALS) LASTLY OBSERVED THAT THE ISSUE OF RENT HAS TO BE SEEN FROM THE POINT O F BUSINESS AND NOT FROM THE PROPERTY INCOME AND JUSTIF IED AND CONFIRMED THE ISSUE MADE BY THE ASSESSING OFFICER. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD INCLUDING THE ORDERS OF AUTHORITIES BELOW. IN THIS THE AO H AS MADE ADDITIONS OF RS. 18,000/ - TO THE INCOME OF THE ASSESSEE BY APPLYING 12% ON THE INTEREST FREE SECURITY DEPOSIT OF RS. 1,50,000/ - TAKEN FRM THE TENANT. T HE ISSUE IS SQUARELY COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIO NER OF INCOME TAX VS. ASIAN HOTELS LTD. REPORTED AS [2008] 168 TAXMAN 59. IT HAS BEEN HELD THAT NOTIONAL INTEREST CALCULATED ON THE INTEREST FREE SECURITY CANNOT BE ADDED AS INCOME EITHER AS BUSINESS INCOME OR UNDER THE HEAD HOUSE PROPERTY. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF ITA NO . 975/PUN/2015 5 HONBLE DELHI HIGH COURT DIRECT THE ASSESSING OFFICER TO DELETE THE NOTIONAL ADDITION OF RS.18,000/ - 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MAY, 2017. SD/ - SD/ - ( SUSHMA CHOWLA ) ( RAJESH KUMAR ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE ; DATED : 5 TH MAY, 201 7 . RK / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 3, PUNE; 4. THE PR. CIT - 2, PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER, // // TRUE COPY // / ASSISTANT REGISTRAR, , / ITAT, PUN E