SMT. RENU GUPTA,MUZAFFARNAGAR vs. ITO, MUZAFFARNAGAR

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ITA 2076/DEL/2016Status: DisposedITAT Delhi28 February 2017AY 2006-074 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal restored the issue of disallowance of interest on borrowed capital back to the Assessing Officer for de novo examination. This was done in light of a previous ITAT decision in the assessee's own case for AY 2008-09, which followed the Supreme Court's ruling in Chennai Properties.

What were the facts?

The assessee appealed against the CIT(A)'s order confirming the addition of Rs. 81,340/- on account of interest paid on borrowed capital. The original assessment was made under Section 147 of the Income Tax Act.

What were the issues?

Whether the interest paid on borrowed capital was deductible as an expense relating to income earned. The validity of proceedings initiated under Section 147 was also raised but not pressed.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3)

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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI

Before: SHRI H.S. SIDHU

ORDER The Assessee has filed the Appeal against the impugned Order dated 29.1.2016 of Ld. CIT(A), Muzaffarnagar pertaining to assessment year 2006-07. The assessee has taken the following grounds:- “

On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the following actions of the AO in:

1. Initiating the proceedings u/s. 147 of the Income Tax Act, 1961 which was without jurisdiction and was based on vague and implausible reasons;

2. Adding Rs. 81,340/- on account of interest paid on borrowed capital treating the same as not being relating to the income earned;

Both the above actions being arbitrary, erroneous and unjust must be quashed with directions for relief.”

2.

The brief facts of the case are that notice u/s. 148 of the I.T. Act, 1961 was issued on 07.8.2012, in response to which, assessee filed return of income declaring taxable income of Rs. 2,00,972/-. The AO determined the total income of Rs. 16,46,670/-, inter-alia, disallowing a sum of Rs. 81,340/- vide his order dated 28.3.2014 passed u/s. 147/143(3) of the I.T. Act, 1961.

3.

Against the aforesaid order of the AO, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 29.1.2016 has partly allowed the appeal of the assessee.

4.

Aggrieved with the aforesaid order, the Assessee is in appeal before the Tribunal.

5.

At the time of hearing, Ld. Counsel of the assessee has not pressed the ground of appeal

no. 1 and therefore, the same is dismissed as not pressed.

6. With regard to ground no.2, Ld. Counsel of the assessee stated that in the assessment year 2008-09 in assessee’s own case the Tribunal while adjudicating the similar and identical issue in assessee’s own case in the assessment year 2008-09 vide order dated 10.1.2017 passed in (AT 2008-09) by the SMC-I, Bench, Delhi has restored the matter back to the file of the AO to examine this issue de novo in light of the decision of the Hon’ble Supreme Court of India in the case of Chennai Properties and Investments Ltd. vs. CIT (2015) 373 ITR 673 (SC). Hence, he requested that the issue raised in ground no. 2 may also be restored back to the file of the AO to decide the same de novo in light of the aforesaid decision of the Hon’ble Supreme Court of India in the case Chennai Properties (Supra).

7. On the contrary, Ld. Sr. DR relied upon the orders of the authorities below.

8.

I have heard both the parties and perused the records, especially the impugned order passed by the Ld.CIT(A) and the decision dated 10.1.2017 referred by the Ld. Counsel of the assessee of the ITAT, ‘SMC-I’ Bench, Delhi in assessee’s own case passed in (AY 2008-09). For the sake of clarity, I am reproducing the finding given by the Tribunal vide para no. 6 & 7 vide its order dated 10.1.2017 in assessee’s own case as under:- “6. I have considered the submissions of both the parties and have perused the record of the case. As agreed by both parties, I restore this matter back to the file of the AO to examine this issue de novo in light

of the decision of the Hon’ble Supreme Court in the case of Chennai Properties and Investment Ltd. (Supra).

7.

In the result, the appeal of the assessee is partly

allowed for statistical purposes.”

9.

After perusing the aforesaid decision of the ITAT, Delhi, I am of the considered view that the issue in dispute is squarely covered by the aforesaid decision, because the facts and circumstances of the present case are exactly similar and identical to that of case of assessee for the AY 2008-09 passed in vide order dated 10.1.2017.

Therefore, respectfully following the aforesaid decision dated 10.1.2017 of the ITAT, SMC-I Bench, Delhi, as aforesaid the issue involved in ground no. 2 is restored back to the file of the Assessing Officer to examine the same de novo in the light of the decision of the Hon’ble Supreme Court in the case of Chennai Properties and Investments Ltd. (supra).

10.

In the result, the appeal of the Assessee is partly allowed for statistical purposes. Order pronounced in the Open Court on 28/02/2017.

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