C.I.T. PTA. vs. ROSHNI DEVI.

ITR/170/1999HC Punjab & HaryanaPHHC01038611199907 December 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL1 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.1535/Chandi/1993 concerning assessment year 1992-93. The Commissioner of Income-tax (CIT), Chandigarh, being aggrieved, sought a reference to the High Court. The High Court of Punjab and Haryana at Chandigarh was asked to decide a question of law arising from the ITAT's order. The dispute pertains to the deductibility of interest paid by the assessee on property allotted on an instalment basis.

What did the High Court hold?

The High Court held that the question of law referred to it had already been decided by the same court in previous cases: 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 cited cases, the High Court had ruled against the revenue and in favour of the assessee on similar issues concerning the deductibility of interest on property allotted on instalment basis. Therefore, following its own precedents, the High Court decided the referred question against the revenue and in favour of the assessee. The reference was disposed of accordingly. The specific reasoning from the cited cases is not elaborated here, but the principle established is that such interest is deductible.

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? 2. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding 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? Revenue's Contention: The revenue has not recorded any specific contentions in the judgment. The judgment states that the question of law has been decided against the revenue. Assessee's Contention: The assessee's contentions are not explicitly detailed in the judgment, but the outcome indicates that the assessee argued for the deductibility of interest paid on the instalment basis as interest on borrowed capital.

Which sections of the Income-tax Act were involved?

24(1)(vi)

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Cause title — parties, addresses and appearances

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.R. No.170 of 1999 Date of decision: 07.12.2006 Commissioner of Income-tax, Chandigarh. -----Applicant Vs. Smt. Roshni Devi, 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.1535/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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