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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
O R D E R
PER PAVAN KUMAR GADALE JM:
The assessee has filed the appeal against the order of National Faceless Appeal Centre (NFAC), Delhi/ CIT(A) passed u/s 143(3) and 250 of the Act.
At the time of hearing, the Ld.AR of the assessee submitted that there is a delay in filing the appeal before the Hon’ble Tribunal and filed an affidavit for condonation of delay. Whereas, the facts mentioned in the affidavit are reasonable and the Ld.DR has no Smt Beena Rajan Shah, Mumbai. - 2 - specific objections. Accordingly, condone the delay and admit the appeal. The assessee has raised the following grounds of appeal:
1. The Learned CIT(A)/NFAC erred in restricting deduction of interest u/s 24(b) to Rs 2,00,000/- while computing Income from House Property instead of allowing deduction of Rs 7,14,855/- as claimed by the Assessee without appreciating that the restriction of Rs 2,00,000/- is applicable to only self occupied properties and not let out properties and hence deduction of interest of Rs 7,14,855 may be allowed.
2. The Appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal.
3. The brief facts of the case that, the assessee is an individual and derives income from house property and income from other sources. The assessee has filed the return of income for the A.Y 2016-17 on 30.03.2017 disclosing a total income of Rs. 8,38,780/-. Subsequently the case was selected for scrutiny under CASS and notice u/s 143(2) and 142(1) of the Act along with questionnaire was issued. Smt Beena Rajan Shah, Mumbai. - 3 - In compliance to the notice, the assessee has submitted the details from time to time through ITBA Portal. On perusal of the financial statements, the Assessing Officer(AO) found that the assessee has disclosed the income from house property of Rs.2,80,000/- and has claimed interest on borrowings u/s 24(b) of the Act of Rs. 7,14,855/- and claimed set off of losses of Rs. 5,18,865/-. The AO in order to verify the genuineness of the claim, has called the assessee to submit the details of rental/lease agreement and certificate in respect of claim of interest. The assessee has submitted the rental agreements and the AO found that the property was let out to her family members and the assessee has claimed interest on loan from rental income. The A.O dealt on the facts, information and provisions of the Act at page 2 & 3 of the order and is of the opinion that the claim is not substantiated with the complete details and has disallowed the interest claim of Rs.7,14,855/- and assessed the total income of Rs. 15,53,640/- and passed the order u/s 143(3) of the Act dated 28.12.2018. Smt Beena Rajan Shah, Mumbai. - 4 -
Aggrieved by the order, the assessee has filed an appeal before the CIT(A), whereas the CIT(A) considered the grounds of appeal, submissions of the assessee and findings of the AO and has restricted the disallowance of interest to the extent of Rs. 5,14,855/- and partly allowed the assessee appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Hon’ble Tribunal.
5. At the time of hearing, the Ld. AR submitted that the CIT(A) erred in not considering the facts that the assessee has obtained loan for the house property acquisition and interest on loan is claimed as deduction against the rental income of the property and these facts and information were filed before the lower authorities and the Ld.AR substantiated the submissions with the paper book and prayed for allowing the appeal. Contra, the Ld. DR relied on the order of the CIT(A).
Heard the rival submissions and perused the material on record. The sole grievance of the assessee as envisaged by the Ld. AR that the CIT(A) has erred Smt Beena Rajan Shah, Mumbai. - 5 - in restring the disallowance of interest of Rs. 5,14,855/-. The contentions of the Ld. AR that the assessee has substantiated the claim before the lower authorities with the documentary evidence and in the earlier years also the assessee has offered the rental income and claimed interest on loan. The Ld. AR also emphasized that the CIT(A) though accepted the facts and details but has allowed the claim of interest to the extent of Rs. 2 lakhs only. Whereas on verification of the facts and information in the paper book at Page 6 to 78 , the assessee has submitted the rental agreement, copy of ledger accounts, bank statements, loan against the fixed deposits and interest certificate and the assessee has let out the property to various tenants and has been offering the rental income and claimed interest on loans and the lower authorities have overlooked the genuineness of the interest expenditure claimed duly supported by the material evidences. Considering the facts, circumstances and submissions and there is no dispute that the assessee has let out the property and derived the rental income and the assessee has substantiated the submissions with the documentary Smt Beena Rajan Shah, Mumbai. - 6 - evidences before the lower authorities and the CIT(A) has accepted the details but granted partial relief Accordingly, set aside the order of the CIT(A) on the present disputed issue and direct the Assessing officer to delete the disallowance of interest and allow the grounds of appeal in favour of the assessee.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 22.08.2023.