SHRI AJAY NARENDRA BANSAL,MUMBAI vs. ITO 22(1)(1), MUMBAI

O R D E R PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against order of the Learned Commissioner of Income Tax (Appeals)–34, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 24.08.2020 for the A.Y. 2013-14.

2. In the facts of the Appellant's case, the learned CIT (A) erred in confirming the interest disallowance of Rs.22,60,482 without considering the decision of Hon ITAT in Appellant's own case allowing such interest for other years. It is submitted that the facts being identical in all the years, the decisions of Hon ITAT were binding on the Ld.CIT(A).

3. On the facts of the Appellant's case it is submitted that the learned CIT(A) ought to have deleted the interest disallowance of Rs. 22,60,482 made by the Learned AO.”

5. Heard both sides, perused the orders of the Coordinate Bench in assessee’s own case wherein the claim for deduction of interest u/s.57 of the Act was allowed by the Tribunal in assessee’s own case for the A.Y.2011-12 as well as in A.Y. 2014-15. The Coordinate Bench while allowing the claim of the assessee for A.Y. 2014-15 in ITA.No. 4543/Mum/2019 dated 13.03.2020 observed as under: - (A.Y: 2013-14) Shri Ajay Narendra Bansal “3. Brief facts are, the assessee is an individual. For the assessment year under dispute, the assessee filed his return of income on 17th March 2015, declaring total income of ` 16,28,230. Subsequently, the assessee filed a revised return of income on 9th January 2016, declaring the same income as was declared in the original return of income. However, in the revised return of income, the assessee claimed the deduction of interest expenditure amounting to ` 23,25,355, against the business income. Whereas, in the original return of income, he has claimed it against income from other sources. Noticing the above, the Assessing Officer called upon the assessee to furnish the details of loan taken on which the interest was paid. On perusal of the details furnished by the assessee the Assessing Officer observed that the interest expenditure pertains to loan taken by the assessee against residential property. Therefore, he held that the interest expenditure along with principle repaid would qualify for deduction under section 24(b) and section 80C of the Act. Accordingly, the Assessing Officer disallowed the interest expenditure of ` 23,25,355. The assessee contested the aforesaid disallowance before the first appellate authority without any success.

4. The learned Authorised Representative submitted, identical issue came up for consideration before the Tribunal in assessee’s own case for the assessment year 2011–12 and after considering the facts and material on record, the Tribunal in ITA no.4949/Mum./2018, dated 20th August 2019, has allowed assessee’s claim of interest expenditure. Thus, she submitted, the disallowance made by the Assessing Officer should be deleted.

6. I have considered rival submissions and perused the material on record. The only reason on which the Assessing Officer has disallowed the interest expenditure and learned Commissioner (Appeals) has also sustained such disallowance is, the loan taken by the assessee against which interest was paid being a housing loan, the assessee can only claim deduction under section 24(b) and section 80C of the Act. Learned Commissioner (Appeals) has also held that such interest expenditure cannot be allowed under section 36(1)(iii) of the Act. As could be seen from the facts on record, in the original return of income the assessee has claimed the deduction of interest expenditure against the income from other sources. Whereas, in the revised return of income the assessee has claimed deduction of interest expenditure against the business income. However, in either case the effect on the total income remains the same as the total income declared by the assessee in the original as (A.Y: 2013-14) Shri Ajay Narendra Bansal well as revised return of income is at the same amount of ` 16,28,230. Notably, while deciding identical issue relating to assessee’s claim of interest expenditure on the very same oan amount, the Tribunal in the order referred to above while allowing assessee’s claim has held that the interest expenditure has to be set– off against the interest income earned and offered under the head income from other sources as per section 57 of the Act. Therefore, keeping in view the aforesaid decision of the Co–ordinate Bench in assessee’s own case, the interest expenditure has to be allowed. I may further add, since in the impugned assessment year the effect of allowance of interest expenditure whether from income from other sources or against business income would be tax neutral, I do not intend to deliberate much on the issue, whether it should be allowed against business income or income from other sources. With the aforesaid observations, grounds raised by the assessee are allowed as indicated above.”

Order pronounced in the virtual court on 11.11.2021.