KIRANKUMAR LAGISETTY,KURNOOL vs. DCIT, CIRCLE-1, KURNOOL

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ITA 2093/HYD/2025Status: DisposedITAT Hyderabad03 July 2026AY 2015-168 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer's own findings during remand proceedings indicated a nexus between the loan and property purchase, and that interest on housing loans can be claimed on an accrual basis. Therefore, a partial deduction for interest was allowed.

What were the facts?

The assessee claimed a deduction for interest on a housing loan. The Assessing Officer disallowed this deduction, arguing the loan's genuineness and utilization for property purchase were not established. The CIT(A) upheld the disallowance.

What were the issues?

Whether the deduction for interest on housing loan under Section 24(b) was rightly disallowed due to lack of proof of genuineness and utilization. Whether Section 115BBE was correctly applied to additional income admitted during survey.

Which sections of the Income-tax Act were involved?

Section 24(b),Section 143(3),Section 263,Section 115BBE,Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad “B” Bench, Hyderabad

For Appellant: Shri Waseem UR Rehman

आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘बी’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad “B” Bench, Hyderabad श्री विजय पाल राि, माननीय उपाध्यक्ष एिं श्री मंजूनाथ जी, माननीय लेखा सदस्य SHRI VIJAY PAL RAO, HON’BLE VICE PRESIDENT AND SHRI MANJUNATHA G, HON’BLE ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.No.2093/Hyd/2025 (निर्धारण वर्ा/ Assessment Year: 2015-16) Kirankumar Lagisetty, Vs. The Deputy Commissioner of Kurnool. Income Tax, PAN : ABXPL7570J Circle – 1, Kurnool. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent)

करदाता का प्रतततितित्व/ : Shri K.A. Sai Prasad, C.A. Assessee Represented by राजस्व का प्रतततितित्व/ : Shri Waseem UR Rehman, Department Represented by CIT-DR सुिवाई समाप्त होिे की ततति/ : 29.06.2026 Date of Conclusion of Hearing घोर्णध की तधरीख/ 03.07.2026 : Date of Pronouncement O R D E R PER MANJUNATHA G., A.M : This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [in short “NFAC”], Delhi, dated 29-10-2025, pertaining to the assessment year 2015-16.

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2.

The brief facts of the case are that the assessee, an individual, filed his return of income for the assessment year 2015-16 on 13.10.2015 declaring total income of Rs.18,76,040/-. The assessment was originally completed under section 143(3) of the Income Tax Act, 1961. Subsequently, the assessment order was revised under section 263 of the Act, by the Principal Commissioner of Income Tax, Tirupati, with directions to verify (i) interest on housing loan claimed under section 24(b), (ii) genuineness of loan taken from M/s. Vishweswara Medical and Surgical Agencies, Kurnool, (iii) opening and closing balances of capital account, (iv) interest income on loans advanced to others, (v) cash balance of Rs.29.15 lakhs and (vi) applicability of section 115BBE on additional income admitted during survey proceedings. Pursuant to the directions issued under section 263 of the Act, the Assessing Officer initiated proceedings and issued notices under sections 143(2) and 142(1) of the Act calling for necessary details and explanations from the assessee.

3.

During the course of consequential assessment proceedings, the Assessing Officer noticed that the assessee had claimed deduction of Rs.5,86,480/- under section 24(b) of the Act towards

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interest on housing loan alleged to have been obtained from M/s. Vishweswara Medical and Surgical Agencies, the proprietary concern of the assessee's father. According to the Assessing Officer, the assessee failed to establish that the amount represented a genuine housing loan utilized for acquisition of house property and further observed that the account with the proprietary concern was only a running account. Therefore, the claim of deduction under section 24(b) of the Act was disallowed. The Assessing Officer further observed that the assessee had admitted additional income of Rs.24,00,000/- during survey proceedings conducted under section 133A of the Act. According to the Assessing Officer, the said additional income represented unexplained money assessable under section 69A of the Act and, therefore, was liable to tax at the rate prescribed under section 115BBE of the Act. Accordingly, the Assessing Officer completed the assessment under section 143(3) r.w.s. 263 of the Act on 17.09.2021 determining the total income at Rs.25,66,480/-.

4.

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) after considering the submissions of the assessee and the remand report of the

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Assessing Officer, upheld the disallowance of deduction claimed under section 24(b) of the Act. However, with regard to the applicability of section 115BBE on additional income of Rs.24,00,000/- admitted during survey proceedings, the Ld. CIT(A), following the decision of the Chandigarh Bench of the Tribunal in the case of Bajaj Sons Ltd., Vs. DCIT (190 ITD 128) held that the surrendered income was not covered under sections 69, 69A or 69C of the Act, and consequently deleted the addition made by invoking section 115BBE of the Act.

5.

Aggrieved by the order of the CIT(A), the assessee as well as the Revenue are in appeal before the Tribunal.

6.

The learned counsel for the assessee, Shri K.A. Sai Prasad, C.A., submitted that the authorities below have erred in disallowing deduction claimed under section 24(b) of the Act. The learned counsel submitted that the assessee had borrowed funds from M/s. Vishweswara Medical and Surgical Agencies for the purpose of purchase of a residential flat and had furnished necessary evidences to establish utilization of the borrowed funds for acquisition of the property. The learned counsel further submitted that the evidences filed by the assessee, including bank

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statements and confirmation from the lender, clearly establish the nexus between the borrowed funds and purchase of the house property. He further submitted that the provisions of section 24(b) of the Act being beneficial in nature, the claim of deduction ought not to have been rejected on mere technicalities. Therefore, he submitted that the disallowance made by the A.O. and sustained by the Ld. CIT(A) deserves to be deleted.

7.

The learned CIT-DR, Shri Waseem Ur Rehman, on the other hand, supported the orders of the lower authorities and submitted that, the assessee has failed to establish that the amount received from M/s. Vishweswara Medical and Surgical Agencies represented a genuine housing loan. The learned CIT-DR submitted that the account maintained with the said concern was in the nature of a running account and the assessee could not furnish any independent evidence to prove that the borrowing was specifically for purchase of house property. He further submitted that the assessee had also failed to substantiate the claim of interest with supporting evidences and, therefore, the authorities below were justified in disallowing the deduction claimed under

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section 24(b) of the Act. Accordingly, he submitted that the order of the Ld. CIT(A) should be upheld.

8.

We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. The A.O. disallowed interest claimed under section 24(b) of the Act, against income from house property for Rs.5,86,480/- on the ground that the assessee has failed to prove that the loan was borrowed for the purpose of construction/purchase of house property in order to claim deduction under section 24(b) of the Act. The A.O. further noted that the account between the assessee and M/s. Vishweswara Medical and Surgical Agencies, is a running account in the books of the firm and has nothing to do with the purchase of house property and the consequent loan availed for the purchase of new house. It was the argument of the learned counsel for the assessee that, in the remand proceedings, the A.O. admitted the fact that the assessee had borrowed housing loan from the firm to the extent of Rs.30,00,000/- and also utilized the said housing loan for the purchase of house property by paying an amount of Rs.29,02,620/-. The A.O. further noted that although the assessee had claimed interest of Rs.5,86,480/-

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on the loan outstanding of Rs.43,86,223/- @ 13.37%, but the assessee had utilized only the loan amount of Rs.29,02,620/- and, therefore, if at all any interest can be allowed as deduction, then interest to the extent of Rs.3,88,080/- can be allowed. The Ld. CIT(A), although noticed the fact that the assessee had availed housing loan to the extent of Rs. 30,00,000/-, but rejected the claim of the assessee by holding that the assessee had not demonstrated that subsequently any interest was paid on the loan taken for the purpose of purchase of house property. In our considered view, both the A.O. and the Ld. CIT(A) are completely erred in coming to the above conclusion for the simple reason that the facts brought on record by the A.O. during the remand proceedings clearly show the nexus between the loan borrowed by the assessee and the purchase of the property. Further, the provisions of section 24(b) of the Act, clearly says interest on housing loan can be claimed on accrual basis. Since the A.O. himself has quantified the interest on housing loan at Rs.3,88,080/-, in our considered view, the Ld. CIT(A) ought to have allowed deduction to the extent of Rs.3,88,080/-. Thus, we

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direct the A.O. to allow deduction towards interest on housing loan under section 24(b) of the Act, for Rs.3,88,080/-.

9.

In the result, the appeal of the assessee is partly allowed.

Order pronounced in the Open Court on 3rd July, 2026.

Sd/- Sd/- श्री विजय पाल राि (मंजूनाथ जी) (VIJAY PAL RAO) (MANJUNATHA G.) उपाध्यक्ष /VICE PRESIDENT लेखा सदस्य/ACCOUNTANT MEMBER

Hyderabad, dated 03.07.2026. TYNM/sps आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Kirankumar Lagisetty, C/o. Katrapati & Associates, 1- 2-298/2/B/3, Sowbhagya Avenue Apts., 1st Floor, Ashok Nagar, Street No.1, Hyderabad – 500020, Telangana. 2. रधजस्व/ The Revenue : The Deputy Commissioner of Income Tax, Circle – 1, Kurnool. 3. The Principal Commissioner of Income Tax, Kurnool. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Digitally signed by TIRUPATI TIRUPATI YAMINI YAMINI NAGA MALLESWARI NAGA MALLESWARI Date: 2026.07.06 10:59:47 +05'30' Sr. Private Secretary ITAT, Hyderabad

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