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Income Tax Appellate Tribunal, MUMBAI BENCHES “C”, MUMBAI
Before: Shri Joginder Singh & Shri Rajendra
आदेश / O R D E R Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 26/06/2014 of the ld. First Appellate Authority, Mumbai, confirming the addition for claim of interest of Rs.1,50,000/- u/s 24(b) of the Income Tax Act, 1961 (hereinafter the Act).
During hearing, at the outset, Shri Vimal Punamiya, ld. counsel for the assessee, contended that the impugned issue is covered in favour of the assessee by the decision of the Tribunal dated 22/07/2015 (ITA No.5427 & 5428/Mum/2014), in the case of assessee itself. This factual matrix was not controverted by Shri M. Dayasagar, ld. CIT-DR.
2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid order dated 22/07/2015 for ready reference and analysis:-
“These are the appeals filed by the assessee against the order
CIT(A), for the assessment years 2008-09 & 2009-2010, in the matter of order passed u/s.143(3) r.w.s.153C of the Income Tax Act.
2. Common grounds are involved in both the assessment years under consideration, which pertain to disallowance of claim of interest u/s.24(b) of the I.T.Act.
Rival contentions have been heard and record perused. Facts in brief are that the assessee is an individual purchased one flat bearing No.1204 in Zara vide agreement dated 3-9- 2007 for amount of Rs.32,67,375/-. For acquiring the flat assessee obtained loan from Nahar Builder amounting to Rs.33,96,950/- on 28-6-2007 and out of that same Rs.32,17,375/- paid to Nahar Enterprises on 6-7-2007. On the above loan assessee paid interest @15% and claimed the deduction u/s.24(b) amounting to Rs.1,50,000/- as the property is self occupied property being the only flat owned by the assessee. The AO disallowed assessee’s claim of interest on the plea that nexus of borrowed funds was not established and that fund was raised from the same group concern.
By the impugned order the CIT(A) confirmed the disallowance of interest, against which the assessee is in further appeals before the Tribunal.
I have considered rival contentions and found that the assessee has actually borrowed funds for purchase of house. The interest paid on such borrowed fund is eligible for deduction u/s.24(b), however, there is no bar that funds cannot be borrowed from group concern, no sanction letter is required for allowing the claim of deduction of interest when
the same is evident from the confirmation so filed by the lender. Section 24(b) of the Act talks about “borrowed capital” and does not talk about “borrowed loan”. As per the provisions of Section 24(b) if the assessee borrowed some funds in any form and paid interest thereon, then he will be entitled for claiming deduction u/s.24(b) of the I.T.Act. However, there is no bar on source of loan, which can be taken from relative concern, friends, any financial institution, bank etc.. Hon’ble Delhi High Court in the case of Mithilesh Kumari 92 ITR 9, held that where the loan was obtained from mother-in-law and interest was paid, the same was allowable. Accordingly, I direct the AO to allow assessee’s claim for interest of Rs.1,50,000/- for the assessment years 2008-09 & 2009-2010 under consideration u/s.24(b) of the I.T.Act.
In the result, appeals of the assessee for both the assessment years i.e. AY 2008-09 & 2009-10 are allowed.”
We find that in the aforesaid order, the Tribunal for Assessment year 2008-09 and 2009-10, order dated 22/07/2015 has deliberated upon the issue which pertains to disallowance of claim of interest u/s 24(b) of the Act and on consideration of factual matrix, the Assessing Officer was directed to allow the claim of interest. No contrary decision was brought to our notice by either side, more specifically the Revenue and since the facts/issue is identical in the present appeal also, therefore, following the order of the Tribunal, the appeal of the assessee is allowed.
Finally, the appeal of the assessee is allowed.
This order was pronounced in the open in the presence of ld. representatives from both sides at the conclusion of the hearing on 30/05/2016.