C.I.T. PTA. vs. SUNITA RANI.

ITR/172/1999HC Punjab & HaryanaPHHC01038613199907 December 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL2 pages
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What were the facts?

The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, passed an order dated 03.10.1997 in I.T.A. No.1538/Chandi/1993 for the assessment year 1992-93. The Commissioner of Income-tax (CIT), Chandigarh, being aggrieved, referred a question of law to the High Court of Punjab and Haryana at Chandigarh. The dispute pertains to the deductibility of interest paid by the assessee on property allotted on an instalment basis. The assessee is Smt. Sunita Rani, and the revenue is the Commissioner of Income-tax, Chandigarh. The amount in dispute is not explicitly stated.

What did the High Court hold?

The High Court of Punjab and Haryana at Chandigarh held that the question of law referred to it has already been decided by this Court in previous judgments. Specifically, the Court referred to its decisions in Commissioner of Income-tax v. Sunil Kumar Sharma (2002) 254 ITR 103 and Commissioner of Income Tax v. Master Sukhwant Singh (2006) 155 Taxman 153. In both these cases, the Court had ruled in favour of the assessee and against the revenue on similar issues. Therefore, following these precedents, the High Court decided the referred question of law against the revenue and in favour of the assessee. The reference was disposed of accordingly. The operative direction was to decide the reference in favour of the assessee.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the transaction of allotment of property to the assessee on instalment basis gives rise to the relationship of borrower and lender between the assessee and the Estate Officer, and that interest paid by the assessee on instalments constitutes interest on borrowed capital deductible from income from house property under Section 24(1)(vi) of the Income-tax Act, 1961? Assessee's contentions: The assessee argued that the interest paid on instalments for the allotted property is deductible as interest on borrowed capital from income from house property. Revenue's contentions: The revenue contended that the ITAT erred in law by holding the transaction as one of borrower and lender and allowing the interest payment as a deduction.

Which sections of the Income-tax Act were involved?

Section 24(1)(vi)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.172 of 1999 Date of decision: 07.12.2006 Commissioner of Income-tax, Chandigarh. -----Applicant Vs. Smt. Sunita Rani, Chandigarh. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'BLE MR JUSTICE RAJESH BINDAL Present: Mr. S.K. Garg Narwana, Advocate for the revenue. Mr. Rajesh Garg, Advocate for the assessee. -----

ORDER: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 03.10.1997 in I.T.A. No.1538/Chandi/1993 in respect of assessment year 1992-93:- “Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that the transaction of allotment of property to the assessee on instalment basis does give rise to the relationship of borrower and lender between the assessee and the Estate Officer and that interest paid by the assessee on instalments constitutes interest on borrowed capital deductible from income from house property u/s 24(I) (vi) of the Income-tax Act, 1961?”

It is not disputed that the question of law, referred, has been decided by t

The order continues below.

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