AL.PR.SLEVAM ALAGHAPPAN,CHENNAI vs. ACIT NON CORPORATE CIRCLE 2, CHENNAI

PDF · subscribers
ITA 1839/CHNY/2018Status: DisposedITAT Chennai24 October 2018AY 2012-133 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the matter to the Assessing Officer for re-adjudication. The interest expense incurred for acquiring an asset used for earning income is generally revenue expenditure.

What were the facts?

The assessee appealed against the disallowance of interest payment on bank borrowing used for acquiring land and building. The issue was similar to a previous case involving the assessee's wife.

What were the issues?

Whether interest paid on borrowings for acquisition of land and building used for business purposes is allowable as a deduction.

Which sections of the Income-tax Act were involved?

Section 57(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘ C’ SMC BENCH : CHENNAI

Before: SHRI GEORGE MATHAN

सुनवाई क� तार�ख/Date of Hearing : 24-10-2018 घोषणा क� तार�ख /Date of Pronouncement : 24-10-2018 आदेश / O R D E R This is an appeal filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-2,Chennai in ITA No.146/2016-17/A.Y 2012-13/CIT(A)-2 dated 09.04.2018 for the assessment year 2012-13.

2.

Shri Saroj Kumar Parida represented on behalf of the Assessee and shri B.Sagadevan represented on behalf of the Revenue

3.

It was submitted by ld.A.R that the issue in this appeal was against the action of the Ld.CIT(A) in confirming the disallowance of the interest payment of `20,11,559/- payable to bank in respect of borrowing utilized for acquisition of land and building. It was a submission that the issue was now squarely covered by the decision of ‘SMC’ ‘B’ Bench of this Tribunal in the case of assessee’s wife Smt.Alagappan Kamalaa in vide order dated 22.03.2018. It was a submission that on identical directions, the issue in this appeal can also be restored to the file of ld. Assessing Officer.

4.

In reply, ld.D.R endorsed the submissions of ld. A.R. It was a submission that the ld.D.R had no objection, if the issue in this appeal can also be restored to the file of ld. Assessing Officer on identical directions given in assessee’s wife case referred to surpa.

5.

I have considered the rival submissions. A perusal of decision of assessee’s wife case vide order dated 22.03.2018 referred to supra, shows that it is similar to the facts in the case of assessee and the Tribunal has held in the case of assessee’s wife Smt.Alagappan Kamalaa referred to supra, as follows:-

“5. I have heard the rival submissions and carefully perused the materials on record. We find merit in the submission of the Ld.AR. It is obvious that interest expense incurred by the assessee towards loan obtained for the acquisition of an asset which is put to use for the purpose of earning income, will be in the nature of revenue expenditure. The Ld.AR had submitted that the assessee had utilized all the assets purchased/constructed by obtaining loan, into her activity of renting/business etc., and thereby earned income. In these circumstances, I’m of the view that the assessee is entitled for deduction towards the interest expense incurred as per the provisions of Section 57(iii) of the Act if the claim of the Ld.AR is genuine. However, since I’m not able to verify the entire facts of the case, I hereby remit the matter to the file of Ld.CIT(A) with a direction to verify the entire activity of the assessee, scope of income earned by her, the loan obtained by her and the asset put to use for the purpose of earning income against which loan has been obtained etc., and thereafter decide the issue in accordance with merit and law based on our observation herein above. I also direct the Ld.CIT(A) to obtain a Remand Report from the Ld.AO, if certain new materials are brought before him for the first time and thereafter decide the issue in accordance with merit.”

As it is noticed that the issue in this appeal has been squarely covered by the above decision of ‘SMC’ ‘B’ Bench of this Tribunal, respectfully following the decision of SMC Bench of this Tribunal, I hereby restore the matter to the file of ld. Assessing Officer for re-adjudication on identical directions given in assessee’s wife case referred to supra.

6.

In the result, the appeal of the assessee is partly allowed for statistical purposes.

Order pronounced in the open court after conclusion of hearing on 24th October, 2018, at Chennai.

More judgments on Section 57(iii)

All 716 judgments and leading authorities on Section 57(iii) →

Recent GST High Court judgments

Search GST case law →