MANJUL BRIJESHWAR UBEROI,NOIDA, UTTAR PRADESH vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 7(1)(1), MUMBAI

PER SAKTIJIT DEY, V.P.:: This is an appeal against the order dated 23.07.2024 passed by the National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year (AY) 2017-18. 2. The solitary dispute in the appeal is disallowance of interest expenses amounting to Rs.29,67,250/-. 3. Briefly the facts are, the assessee is a resident individual. For the assessment year under dispute, the assessee filed return of income on AY 2017-18 29.10.2017 declaring income of Rs.76,95,180/-. In course of assessment proceeding, while verifying the return of income filed by the assessee, the Assessing Officer noticed that the assessee has claimed deduction on account of interest expenses amounting to Rs.29,67,250/-. He, therefore, called upon the assessee to justify the claim. In response to the query raised, the assessee furnished the requisite details. However, going through the submissions of the assessee, the Assessing Officer, was of the view that the interest claimed as deduction pertains to housing loan availed by the assessee and in respect of which the assessee has already claimed deduction while computing the income from house property. Accordingly, he disallowed assessee’s claim of deduction in respect of interest expenses of Rs.29,67,250/-. Though, the assessee contested the disallowance before learned First Appellate Authority, however, she was unsuccessful. 4. Before us, learned counsel appearing for the assessee submitted that the Departmental Authorities have completely misconceived the facts while disallowing the claim of the assessee. She submitted, actually, assessee had taken two separate loans, one for housing and other loan was for other purposes. She submitted, as far as housing loan is concerned, it was entirely utilized for development of the house property. She submitted, the interest on housing loan was claimed as deduction u/s. 24 of the Act to the extent of Rs.2,00,000/-, though, interest was paid to the tune of Rs. 2,19,543/-. She AY 2017-18 Manjul Brijeshwar Uberoi Vs. ACIT, Mumbai submitted, apart from the housing loan, assessee had taken another loan by mortgaging her property and the said loan was advanced to other sister concerns on interest. She submitted, on the loan advanced, assessee had received interest income and offered to tax. Whereas, the interest expenditure was set off against such interest income. Thus, she submitted, the interest expense claimed as deduction u/s. 57 of the Act, being totally unrelated to housing loan should be allowed. 5. Learned Departmental Representative (DR) strongly relied upon the observations of the Assessing Officer and learned First Appellate Authority. 6. We have considered rival submissions and perused the materials on record. Reading of the assessment order clearly reveals that the Assessing Officer has disallowed the interest expenses of Rs.29,67,250/- basically, on the reasoning that the assessee having claimed the allowable interest expenditure u/s. 24(b) of the Act, no further deduction on account of interest expense can be made. On perusal of the materials on record, we are of the view, while coming to his conclusion qua the disallowance made, the Assessing Officer has misconceived the factual position by harbouring a wrong notion that the assessee has taken a housing loan. However, facts on record reveal that in addition to the housing loan the assessee had taken from Axis Bank, which was subsequently refinanced by Deutsche Bank, the AY 2017-18 Manjul Brijeshwar Uberoi Vs. ACIT, Mumbai assessee had taken another loan from Deutsche Bank against mortgage of the property. From the return of income filed by the assessee, it is evident that against the housing loan, the assessee has claimed interest expenses of Rs.2,00,000/- in terms with Section 24(b) of the Act. Whereas, the other loan taken by the assessee, in turn, was advanced to some other parties by charging interest and the assessee had received interest income of Rs.29,67,250/- . From the computation of total income, it appears that against such interest income, the assessee has claimed interest expense of Rs.29,67,250/-. However, the actual interest paid in respect of the loan taken from Deutsche Bank is Rs.28,24,190/-. Since the assessee could demonstrate a direct nexus between the interest income earned and interest expenses, in our view deduction on account of interest expense to the extent of Rs.28,21,119/- can be allowed to the assessee. Accordingly, relief to that extent is allowed to the assessee. The Assessing Officer is directed to recompute the disallowance accordingly. 7. In the result, appeal is partly allowed. Order pronounced in the open court on 13/01/2025. df (GIRISH AGRAWAL) (SAKTIJIT DEY) (ACCOUNTANT MEMBER) (VICE PRESIDENT) Mumbai, Dated: 13.01.2025 Aks/- AY 2017-18 Copy of the Order forwarded to :

The Appellant, The Respondent, The CIT, The DR ITAT & Guard File

BY ORDER,//

Sr. Private Secretary/ Asst.