SH. RAJESH CHANANA,NEW DELHI vs. ITO, NEW DELHI

ORDER

PER SUCHITRA KAMBLE, JM

“1. That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in sustaining the part disallowance of deduction of interest paid and claimed under section 24(b) of the Act, amounting to Rs. 28, 16, 512/-, as against the total deduction claimed by the appellant amounting to Rs. 57, 18, 810/-.

2. That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts by ignoring the basic fact that during the year loan amounting to Rs. 4, 00, 00, 000/- was raised by the appellant from M/s PNB Housing Finance Ltd., and interest paid by appellant on the said loan amounted to Rs. 57, 18, 810/-, which was wholly allowable as deduction under section 24 (b) of the I.T. Act 2.1 That the in doing so, the learned Commissioner of Income Tax (Appeals) ignored the basic fact that the interest paid amounting to Rs. 28, 16, 512/- pertained to loan amounts of Rs. 1, 50, 00, 000/- and Rs. 47, 00, 000/- out of total loan of Rs. 4, 00, 00, 000/-, taken during the year and was utilized in making payments to lessees M/s Euro Motors Ltd. and M/s Daikin Air Conditioning India Pvt. Ltd., under termination of lease agreements, on account of renovation and reconstruction expenses incurred by them on the property let out and as such, was an allowable expenditure under section 24 (b) of the Act.

2.2. That the learned Commissioner of Income Tax (Appeals) has further ignored the basic fact that the amounts of Rs. 1, 50, 00, 000/- and Rs. 47, 00, 000/- were paid to the lessees to settle the dispute and their claim, with regard to the expenses incurred by them for reconstruction/ renovation and also to acquire the said property, as they were not giving up the occupation of the said property without being reimbursed for the said expenditures incurred by them in past, and as such, the interest on the same was directly relatable to acquisition and reconstruction of the said property, and as such, allowable under section 24 (b) of the Act.

3. That the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts in not giving the deduction of Rs. 28, 16, 512 under section 24(b) of the Act, as the learned CIT (A) had accepted that the payment made by assessee was for the expenditures on construction being incurred by the lessees by giving a categorical finding, and as such, the disallowance so sustained by learned CIT (A) is contrary to material available on record, and is liable to be deleted.

4. That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in making additions in the hands of assessee company, without giving any fair and proper opportunity of being heard to the appellant company. Thereby, violating the principles of natural justice.

5. That the learned Commissioner of Income Tax (Appeals) has further erred by sustaining of levy of interest u/s 234B of the Act, which is not leviable on the facts of the appellant company.”