MARIA RAMESH,CHENNAI vs. ACIT CORPORATE CIRCLE 1(2), CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -1, Chennai, dated 26.03.2018 and pertains to assessment year 2014-15.

Sh. N. Devanathan, the Ld.counsel for the assessee, submitted that the assessee purchased properties in Australia and Singapore after borrowing loan in the year 2010. During the financial year 2015-16 relevant to assessment year 2016-17, according to the Ld. counsel, the assessee sold the property in Australia. The assessee explained before the Assessing Officer that one Shri Balamurugan made investment in the name of the assessee to the extent of ₹90,61,014/-. According to the Ld. counsel, the said Balamurugan, in fact, gave a loan of ₹1,81,22,028/-. The Assessing Officer found that the property was purchased in the name of assessee and her husband, therefore, 50% of the loan amount ₹1,81,22,028/- was treated as investment by the assessee. According to the Ld. counsel, the Assessing Officer disbelieved the claim of loan from Shri Balamurugan and made addition of ₹90,61,014/- in the hands of the assessee for assessment year 2014-15, which is under consideration. However, according to the Ld. counsel, in respect of the very same loan, no addition was made in the hands of the assessee’s husband for the assessment year 2014-15. Therefore, according to the Ld. counsel, there cannot be any addition in the hands of the assessee alone.

On the contrary, Shri R. Clement Ramesh Kumar, the Ld. Departmental Representative, submitted that the Assessing Officer found that the assessee purchased property during the financial year 2013-14 and during the financial year 2015-16, the property in Australia was sold. Therefore, when the Assessing Officer asked the assessee to prove the source for making investment in the property at Australia and Singapore, the assessee established the source for making investment partially. However, the claim of assessee that she borrowed loan to the extent of ₹1,81,22,028/- along with her husband from one Shri Balamurugan was not established, therefore, the Assessing Officer disbelieved the claim of the assessee regarding borrowal of loan. Accordingly, the Assessing Officer made addition with regard to 50% of the loan amount in the hands of the assessee. The Ld. D.R. very fairly submitted that for the assessment year 2014-15, in the case of assessee’s husband Shri Pallavaram Kothandaraman Ramesh, no addition was made with regard to source of investment. However, for the assessment year 2015-16, the Assessing Officer made addition of ₹85,11,654/- in the hands of the assessee’s husband. Therefore, according to the Ld. D.R., the Assessing Officer made addition of ₹85,11,654/- in respect of the very same loan in the hands of the assessee’s husband for the assessment year 2015-16. On a query from the Bench, when addition was made in the hands of the assessee’s husband for the assessment year 2015-16, in respect of the very same loan, on sale of very same property in Australia, how there can be any addition in the hands of the assessee for the year under consideration? The Ld. D.R. submitted that he is leaving the matter to the decision of this Tribunal.

We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee purchased properties at Singapore and Australia. During the financial year 2015-16, the assessee sold property at Australia. The Assessing Officer asked the assessee to prove the source for investment in the property at Australia and Singapore to the extent of ₹2,05,62,211/-. The assessee’s explanation with regard to loan borrowed from Shri Balamurugan was disbelieved and 50% of loan amount was added to the total income of the assessee.

The contention of the assessee before this Tribunal is that the property was purchased borrowing loan from Shri Balamurugan in the financial year 2010-11 and the property at Australia was admittedly sold during the financial year 2015-16. Therefore, there cannot be any addition during the year under consideration. In respect of very same property at Australia, the Assessing Officer made addition of ₹85,11,654/- in the hands of the assessee’s husband for the financial year 2014-15 relevant to assessment year 2015-16. For the assessment year 2014-15 in respect of very same property and very same loan, no addition was made in the hands of the assessee’s husband. Therefore, this Tribunal is of the considered opinion that there cannot be any addition in the hands of the assessee also for assessment year 2014-15, which is under consideration. In other words, there was no investment or sale of property during the year under consideration. Therefore, no question of any disallowance / addition would arise for consideration in respect of the property at Australia and Singapore during the year under consideration. In view of the above, we are unable to uphold the orders of the lower authorities. Accordingly, the orders of both the authorities below are set aside and the addition of ₹90,61,014/- is deleted.

In the result, the appeal filed by the assessee is allowed.