M/S NETRA SOFTWARE TECHNOLOGIES PVT LTD ,BANGALORE vs. THE ASSISTANT COMMISSIONER OF INCOME TAX (CPC) (ASSESSSS IS ASSESSED TO TAX WITH ACIT CIRCLE-5(1)(1),, BANGALORE

Per Chandra Poojari, Accountant Member This appeal by the assessee is directed against the order dated 11.10.2017 of the CIT(Appeals)-5, Bengaluru for the assessment year 2011-12 on the following grounds:-

“1.1 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in adjudicating the order as passed by him. The order is bad in law and liable to be quashed. 2.1 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in confirming the order passed under section 154 by the assessing officer as to allowing only Rs.1,08,668/- towards loss as against the entire value of loss of Rs.1,37,90,289/-.

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2.2 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in computing the losses as well as denying losses to be carried forward to the extent of Rs. 1,36,81,621/- [1,37,90,289 less 1,08,668] 3.1 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in denying the claim of interest deduction based on technical issue in the CPC's system that fails to permit such deduction. 3.2 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in disallowing interest on the ground that there is no rental income. 4.1 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in the interpretation of the provisions of law. On facts and in the circumstances of the case and law applicable, order of the Assessing Officer ought to be quashed. 5.1 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in summarily rejecting the submissions made by the assessee. 6.1 In view of the above and other grounds to be adduced at the time of hearing, the appellant prays that the order passed by the learned Commissioner of Income tax (Appeals) 5, Bangalore be quashed And Losses of Rs. 1,37,90,289/- be allowed to be carried forward as claimed in the revised return of income. The appellant prays accordingly.” 2. The facts of the case are that assessee filed a loss return of Rs.1,76,77,280 on 30.9.2011. However, the said return was revised to rectify certain mistakes on 7.3.2013 declaring a loss of Rs.1,37,90,289. In the said revised return, the assessee had claimed interest paid on loan taken for construction of commercial property amounting to Rs.1,38,31,621

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as deduction u/s. 24 of the Act while computing loss under the head ‘income from house property’. The above sum included 1/5th of pre- construction period interest of Rs.68,36,284. During the year, some balances relating to sundry creditors amounting to Rs.41,332 were written off and offered to tax under the head ‘income from other sources’. The loss from house property was set off against income from other sources to arrive at the net loss of Rs.1,37,90,289 and this was carried forward.

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out even after best efforts of the assessee to let out the property; that cannot lead to the conclusion that interest incurred by the assessee cannot be allowed. For this purpose, she relied on the decision of the Delhi Tribunal in the case of Ms. Priyananki Singh Sood v. DCIT, 174 ITD 371 (Del).

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clearance from fire fighting department, etc., it cannot be presumed that building was ready to let out and assessee taken any steps to let out. The whole plea of the assessee to let out the property is only on presumption basis without any specific evidence on record to suggest that assessee has taken steps to let out the property. In such circumstances, the lower authorities are justified in disallowing the claim of assessee with regard to interest borrowed on loan used for construction of building. In other words, this interest incurred by the assessee is to be capitalised to the cost of building, rather than the claim of deduction u/s. 24 of the Act.

Further, it is well settled that a mistake apparent on the record must 7. be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. In the present case, the Departmental authorities have categorically denied the that the construction of commercial building was completed and it was ready to let out and that assessee had taken steps to let out the property. These findings of the revenue authorities cannot be sought to be rectified in the rectification proceedings. Entertaining such a plea of the assessee would only mean review of the order for which the revenue authorities have no power.

In the present case, the assessee has not enclosed any evidence 8. along with the return suggesting completion of construction of commercial building and its readiness to let out, as such the ACIT(CPC) denied the interest claimed by the assessee by way of intimation sent to the assessee. The assessee thereafter sought to rectify the same vide proceedings u/s. 154 of the Act which is not permissible. Had there been any evidence furnished along with the return of income with regard to completion of construction of the building and its readiness to let out, then the claim of the assessee could have been entertained in the rectification proceedings u/s. 154 of the Act by the revenue authorities. In the absence of any such

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evidence furnished, the CIT(Appeals) was justified in rejecting the claim of assessee. The issue raised by the assessee is a debatable issue which cannot be rectified in the proceedings u/s. 154 of the Act.

Pronounced in the open court on this 9th day of March, 2022.

Sd/- Sd/- ( BEENA PILLAI ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER

Bangalore, Dated, the 9th March, 2022. /Desai S Murthy /

Copy to:

By order

Assistant Registrar ITAT, Bangalore.