SSARUTA P. DROLIAA,MUMBAI vs. ITO WD 15(3)(3), MUMBAI

1. Commissioner of Income Tax (Appeals) has erred in holding that :- a) The loan was taken by assessee’s husband only. b) The assessee has not raised the genuine loan. c) The sharing of loan and interest is not permissible between husband and assessee.

Here in this case, the AO has disallowed the claim of interest payment on the housing loan taken from the Federal Bank which was claimed under section 24(b) by the assessee. Such a claim has been disallowed on the ground that, repayment has been by the assessee’s husband Mr. Pawan Drolia. The assessee’s claim had been that, she had purchased a residential flat along with her husband for which a housing loan of Rs.77.5 lakhs was taken. She has claimed deduction under section 24(b) and 80-C on the said repayment of bank loan. However, the CIT(A) too held that assessee has made wrong claim of deduction under section 24(b) as well as 80-C, because repayment of interest and principle of housing loan is available only to the person who actually borrows the capital / loan, which here in this case is the husband of the assessee and not the assessee. Accordingly, he confirmed the action of the AO.

Before us, the Ld. Counsel submitted that, assessee and her husband has taken housing loan of Rs.77.50 lakhs from Federal Bank. The said loan was in the joint name of the assessee as well as her husband, Mr. Pawan Drolia. In support, Ld. Counsel also submitted the latest acknowledgement letter of loan by the Federal Bank Ltd., specifying the name of the assessee as well as her husband. The loan amount was directly paid to the builder. A copy of loan statement received from the bank issued in the name of Mr. Pawan Kumar Drolia and the assessee was also filed in the paper book. A copy of interest certificate has also been filed before us.

On the other hand, Ld. DR strongly relied upon the order of the AO as well as CIT(A) and submitted that, in case the documents were furnished by the assessee are correct, then matter should be re-examined afresh by the AO.

After considering the rival submission and on perusal of relevant finding given in the impugned order as well as material placed before us, we find that the main dispute regarding disallowance of claim made under section 24(b) and 80-C is that, whether the assessee has borrowed the housing loan or not and whether the repayment of the loan has been made by her husband only or by assessee also. To rebut this finding, the Ld. Counsel had drew our attention to, firstly, the agreement with the builder for the purchase of house which shows that, property is in the name of the assessee as well as her husband; secondly, letter from Federal Bank Ltd. showing that loan amount of Rs.77.50 lakhs was sanctioned in the name of the assessee as well as her husband; and lastly, interest certificate issued by the bank which has been issued in the joint name of the assessee as well as her husband. All these documents have a very vital bearing, which has not been properly appreciated by the authorities below. Accordingly, we are setting aside the order of the CIT(A) and remit the matter back to the file of the AO to examine this issue afresh in the light of these documents and decide the matter accordingly after giving due and effective opportunity to the assessee. Accordingly, ground raised by the assessee is allowed.

In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 13th April, 2016.