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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI H. S. SIDHU & SHRI PRASHANT MAHARISHI
PER H.S. SIDHU, JM ORDER These appeals are filed by Revenue and Assessee against the separate orders passed by the Ld. CIT(A), New Delhi relating to Assessment Years 2007-08; 2009-10 & 2008-09 respectively. Since the issues involved in these appeals are common and identical hence, they are being consolidated and disposed of by this common order for the sake of convenience, by dealing with assessment year 2007-08.
The grounds raised in Revenue’s Appeal No. 2608/Del/2011 (AY 2007-08) read as under:-
“1. The order of the Ld. CIT(A) is erroneous and contrary to facts and law.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 20,10,453/- made u/s. 24(b) of the I.T. Act, by disallowing the interest.
2.1 The Ld. CIT(A) ignored the fact that the assessee was in possession of the build up property before taking loan on whcih interest was paid.
3. The appellant craves leave to add, to alter, or amend any grounds of the appeal raised above at the time of the hearing.”
3. The grounds raised in Revenue’s Appeal No. 6293/Del/2013 (AY 2009-10) read as under:-
“1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of deduction of Rs. 17,04,030/- claimed u/s. 24(b) without considering the fact the assessee failed to establish that the payment of interest is in respect of funds borrowed for acquisition of asset from which the rental income has been earned?
2. That the order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law.
3. The appellant craves leave to add, to alter, or amend or forgo any grounds of the appeal raised above at the time of the hearing.”
The grounds raised in the Assessee’s Appeal No. 4247/Del/2013 (AY 2008-09) read as under:-
“1. The order is bad in law, as it has been passed in gross violation of principles of natural justice.
2. Ld. AO has erred in not allowing the deduction u/s. 24(b) of interest paid on borrowed capital of Rs. 9,70,998/- against the Rental Income under House Property.
The appellant may be permitted to add, alter or amend any of the foregoing grounds of appeal.”
The brief facts of the case are that return of income was e-filed by the assessee on 25.10.2007. The return was processed u/s. 143(1) and subsequently the case was selected for scrutiny through CASS. A notice u/s. 143(2) of the Act was issued and duly served upon the assessee. The Assessee during the year under consideration had earned income from renting the premises and also from hiring the office equipment, air conditioners, generators etc. The income earned from the aforesaid sources was shown as business income and various expenses were claimed against the same. The AO vide order dated 24.12.2009 passed u/s. 143(3) treated the rental income as income from house property and hire charges as income from other sources.
Aggrieved with the aforesaid assessment order, assessee appealed before the Ld. CIT(A), who vide impugned order dated 31.1.2011 partly allowed the appeal of the assessee and allowed the relief of Rs. 20,10,453/- to the assessee.
Ld. Sr. DR relied upon the orders passed by the AO and reiterated the contentions raised in the grounds of appeal and requested to quash the order of the Ld. CIT(A).
7.1 On the other hand, Ld. A.R. has relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.
We have heard both the parties and perused the records, especially the order of the revenue authorities. We find that the Ld. CIT(A) has elaborately discussed the issue in dispute. For the sake of convenience, the relevant findings mentioned at para no. 8.2 of the impugned order is reproduced hereunder:-
“8.2 It is seen from the assessment order that the AO has not allowed interest on term loan amounting to Rs.
20,10,453/- which the appellant had taken for renovation and reconstruction, as deduction from income from house property. The Ld. AR submitted a copy of sanction letter of term loan and the details of interest charged by the Bank. On the sanction letter is clearly mentioned that the loan was granted for renovation/ reconstruction purposes. I, therefore, do not find any merit in the action of the AO in not allowing the same as deduction u/s. 24(b) of the Act.
The disallowance being erroneous is directed to be reversed. The appellants gets a relief of Rs.
20,10,453/-.”
8.1 After perusing the aforesaid finding of the Ld. CIT(A), it is not disputed that assessee had taken term loan for renovation and reconstruction and AO has not allowed the interest on term loan amounting to Rs. 20,109,453/-, as deduction from house property.
However, as per the copy of sanction letter available on record, shows that loan was granted for renovation/ reconstruction purposes, and therefore, the assessee is entitled for deduction u/s. 24(b). Therefore, in our considered opinion, the Ld. CIT(A) has rightly directed to be reversed the same and gave a relief of Rs. 20,10,453/-, which does not need any interference on our part, hence, we affirm the action of the Ld. CIT(A) on the issue in dispute and dismiss the Appeal of the Revenue accordingly.
8.2 With regard to (AY 2009-10) is concerned, since we have dismissed the Appeal of the Revenue for the assessment year 2007-08, as aforesaid, taking the consistent view, the ITA No. 6293/Del/2013 (AY 2009-10) filed by the Revenue also stands dismissed.
As regards Assessee’s (AY 2008-09) is concerned, since we have already dismissed the Revenue’s Appeals in respect of the assessment years 2007-08 & 2009-10 as aforesaid and allowed the deduction to the assessee by upholding the action of the Ld. CIT(A), respectfully following our aforesaid decision, we allow the Appeal of the Assessee being (AY 2008-09).
In the result, both the appeals filed by the Revenue for the assessment years 2007-08 & 2009-10 stand dismissed and Assessee’s Appeal for AY 2008-09 stands allowed in the aforesaid manner.
Order pronounced in the open court on 01/12/2015.