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Income Tax Appellate Tribunal, DELHI BENCH “SMC-II”, NEW DELHI
Before: SHRI H.S. SIDHU
Assessee by : Sh. PN CHAWLA, ADV. & MS. RICHA SHARMA, ADV. Department by : Sh. AMRIT LAL, SR. DR ORDER ORDER ORDER ORDER
This appeal by the Assessee is directed against the Order dated 11.11.2014 of the Ld. CIT(A)-XXIII, New Delhi pertaining to assessment year 2006-07 on the following grounds:-
That the order of the Ld. CIT (A)-XXIII, New Delhi is contrary to law and facts on record.
2. Whether on the facts and circumstances of the case the Ld. CIT(A)-XXIII, New Delhi was justified in confirming the addition of Rs. 4,20,783/- uls 23(c) read with section 24(b)? 3. Whether on the facts and circumstances of the case Ld. CIT (A)-XXIII, New Delhi was justified in confirming the addition without going into detailed facts of the case and assuming that it was a five storey building instead of a four storey building. 4. That the Ld. CIT (A) has wrongly applied the provision of section 23(c) read with section 24(b) as the property was vacant only for three and half months and the disallowance should have been based on the notional value and not the actual rent received or receivable. Accordingly the addition sustained is illegal.
The brief facts of the case are that assessee filed the return showing total income of Rs. 21,02,830/- on 4.10.2006 and processed the same u/s. 143(1) of the I.T. Act, 1961 on the same income. Subsequently assessment u/s 143(3) of the Act was completed on 21.11.2008 at a total income of Rs. 46,33,200/-. Aggrieved with the aforesaid assessment, assessee preferred an before the Ld. ClT(A) who dismissed the appeal of the assessee and upheld all the additions made by the AO. Against the Ld. CIT(A)'s order, the assessee has filed an appeal before the ITAT and fhe ITAT vide order dated 6.5.2011 passed in was set aside the order of the Ld. ClT(A) on the issue and restored the matter back to the file of the AO for re-adjudication. Accordingly, in compliance of the ITA T's directions, a notice u/s. 143(2) of the Income Tax Act, 1961 was issued on 15.3.2012 and in response thereto the assessee's counsel attended the hearing and furnished the written submission and required details. Thereafter, the AO completed the assessment u/s. 143(3)/254 of the I.T. Act, 1961 on 17.12.2012 at an income of Rs. 41,54,330.
Against the assessment order, assessee preferred an appeal before the Ld. CIT(A) who vide his impugned order dated 11.11.2014 has partly allowed the appeal of the assessee.
Against the order of the Ld. CIT(A), assessee is in appeal before the Tribunal.
During the hearing, Ld. Counsel of the assessee stated that the assessee Mrs Mohini Bindra is owner of the property no. E-4, Greater Kailash-1 since 1971 and she entered into collaboration agreement on 11-02-2002 with Mr Ajay Bharti who had to construct, basement, ground floor, first floor, second floor, third floor as per agreement. But he constructed only basement, ground, first and second floor and as per agreement and took possession of first floor in the year 2003 and started a restaurant which was illegal and the MCD stopped the running of the restaurant. He further stated that Ajay Bharti could not construct third floor due to intervention of Supreme Court as they did not allow third floor to be constructed. Thus, there were only basement, ground, first, second floor. It was the further contention that Mr Ajay Bharti was entitled as collaborator for the rights of first floor sold the same to Mrs Mohini Bindra for Rs 75,08,000/- for which she took a loan of Rs 2Crores from Vijaya Bank and out of the remaining gave loan of Rs 90Lacs to weavers on interest and the remaining amount was kept for renovation of the building. In the year 2006-07 the assessee claimed interest on borrowed capital from Vijaya Bank amounting to Rs. 21,25,049/- and the AO disallowed the interest against which the assessee went in appeal before the Ld. CIT(A) who had confirmed the addition of Rs. 4,20,783/- against which the assessee has filed the appeal before the Tribunal. Ld. Counsel of the assessee also stated that addition of Rs. 4,20,783/- is excessive and as per the following calculations it should be restricted to Rs. 1,12,167/- only: a) Calculation of interest paid to Vijaya Bank Rs. 21,25,049/- b) Less Interest received by weavers Rs. 10,76,380/- Balance Rs. 10,48,669/- c) The interest of Rs. 10,48,669/- is to be divided in four parts i.e. three parts which were to be given on rent and one part for self occupied property. Thus one fourth comes to Rs. 2,62,167/- Less Deduction under the Rs. 1,50,000/- head SOP Balance Rs. 1,12,167/-
On other hand, Ld. DR has relied upon the orders of the authorities below and stated that the order of the Ld. CIT(A) is a well reasoned and the same does not need any interference on our part, hence, the same may be upheld and accordingly, the appeal of the assessee may be dismissed.
I have heard both the parties and perused the records, especially the orders of the revenue authorities. After perusing the aforesaid calculations, I am of the considered view that the calculations submitted by the Ld. Counsel of the Assessee seems to be genuine and reasonable, which needs to be accepted. Accordingly, I accept the aforesaid calculations and restrict the addition to Rs. 1,12,167/- as against the addition of Rs. 4,20,783/ and allow the ground the appeal of the assessee.
In the result, the Appeal of the Assessee is partly allowed.
Order pronounced in the Open Court on 13/10/2016.