Loading judgment…
Facts
The assessee, Leon Realtors Pvt. Ltd., earned rental income and maintenance charges. The Assessing Officer, during scrutiny assessment for A.Y. 2012-13, made an addition of Rs. 8,34,43,668/- under section 24(b) of the Income Tax Act, 1961. The Ld. CIT(A) subsequently deleted this addition, leading the Revenue to file the present appeal.
Held
The Tribunal noted that a similar issue in the assessee's own case for A.Y. 2013-14 had already been decided by a Co-ordinate Bench, dismissing the Revenue's appeal. Respectfully following this prior decision, the Tribunal found no merit in the Revenue's current appeal. The CIT(A)'s order deleting the addition was upheld.
Key Issues
Whether the Ld. CIT(A) erred in deleting the addition of Rs. 8,34,43,668/- made under section 24(b) of the Income Tax Act, 1961.
Sections Cited
Section 24(b), Section 143(1), Section 143(2), Section 24(a), Section 24(1)(vi), Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
ORDER PER YOGESH KUMAR U.S., JM: This appeal is filed by the Revenue against the order of Ld.
Commissioner of Income Tax (Appeals)-5, Delhi [“Ld. CIT(A)”, for short], dated 07/07/2017 for Assessment Year 2012-13.
Grounds taken in this appeal is as under:
Leon Realtors Pvt. Ltd. “1. Whether in facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 8,34,43,668/- u/s 24(b) of the Income Tax Act, 1961 (Rs. 19,60,87,646/- minus Rs. 11,26,43,978/-) made by the AO.
2. That the order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law.
3. That the grounds of appeal
are without prejudice to each other.
4. That the appellant craves leave to add, alter, amend or forego any grounds(s) of the appeal raised above at the time of hearing.”
Brief facts of the case are that, during the year, the appellant earned rental income and maintenance charges of the same building.
Return declaring loss of Rs. 8,45,89,976/- was e-filed. The returns were processed u/s 143(1) of the IT Act. The case was selected for scrutiny and notices u/s 143(2) were issued for the year under consideration and duly served upon the assessee. The income for the year stands assessed at Rs. 11,51,980/- after re-computing income from house property by including income derived from maintenance services and limiting the deductions claimed u/s 24(a) and 24(b) of the Act as also limiting the interest expenditure allowable against 'income from other sources'. Aggrieved by the assessment order, the assessee Page 2 of 5
Leon Realtors Pvt. Ltd. preferred an appeal before the CIT(A), the Ld. CIT(A) vide order dated 07/07/2017 deleted the addition of Rs. 8,34,43,668/- u/s 24(b) of the Act made by the A.O. As against the order of the Ld. CIT(A), the Department of Revenue preferred the present Appeal on the grounds mentioned above.
The Ld. Departmental Representative relying on the assessment order submitted that the Ld. CIT(A) committed error in deleting the addition of Rs. 8,34,43,668/- made u/s 24(b) of the Act.
Per contra, the Ld. Assessee's Representative submitted that the similar issue has been decided by the Co-ordinate Bench of the Tribunal in Assessee’s own case for the Assessment Year 2013-14 and therefore sought for dismissal of the present Appeal filed by the Revenue.
We have heard both the parties and perused the material available on record. The Co-ordinate Bench of the Tribunal while
Leon Realtors Pvt. Ltd. dealing with the similar issue by dismissing the Appeal preferred by the Revenue, held as under:-
“7. The Ld. CIT(A) observed that there have been many loan transactions, by way of replacement of loans taken with new loans, but nowhere it is seen that total interest cost allocated or the loan amount utilized is more than the gross value of asset standing in the balance sheet. The loans amount have been received and repaid to the Assessee’s bank accounts in Standard Chartered Bank and HDFC Bank and are entirely found to be relatable. The cost of borrowing that has been claimed has been restricted to Rs.114.34 crores that has been found to be actually utilized in the building as well as interior and other installations and during the year the Assessee has incurred loan processing fees of Rs.6.78 crores, the Ld. CIT(A) has also found that the fees have been paid to Standard Chartered Bank in respect of a loan availed of by a syndicate of some of the group companies and it has noted that the claim out of Rs.6.78 crores under house property income has been restricted and claimed @81.85 @5.55 crores. Considering the fact that Board’s Circular No.28[F.No.8/8/69-IT(A-I)], dated 20/08/1969, there is no restriction on borrowing new loan for the purposes of repaying old loan and the claim of interest paid on such second loan cold also be allowable as deduction u/s 24(1)(vi). Therefore, in our considered opinion, the Ld. CIT(A) has committed no error in deleting the addition made by the AO. Accordingly, grounds of appeal of the Revenue are dismissed as devoid of merit.”
By respectfully following the order of the Coordinate Bench in Assessee’s own case for Assessment Year 2013-14 (supra), we find
Leon Realtors Pvt. Ltd. no merit in the present appeal filed by the Revenue, accordingly, the Appeal filed by the Revenue is dismissed.
In the result, Appeal filed by the Revenue is dismissed.
Order pronounced in open Court on 09th February, 2024