RAMESH CHANDER AASTHA,NEW DELHI vs. ACIT CIRCLE-19, NEW DELHI

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ITA 7564/DEL/2019Status: DisposedITAT Delhi03 November 2023AY 2015-16Bench: SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, MS ASTHA CHANDRA (Judicial Member)3 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) pragmatically restricted the disallowance of interest, allowing a proportionate claim. The Tribunal found this decision logical and upheld it, stating it calls for no interference.

What were the facts?

The Assessing Officer disallowed interest paid on loans amounting to Rs. 28,42,413/-. The assessee claimed the loan was partly used for business and partly for personal property, while the AO concluded it was for repayment of an old loan not used for business.

What were the issues?

Whether interest paid on loans, partly utilized for business and partly for personal purposes, is allowable as a deduction.

Which sections of the Income-tax Act were involved?

Section 37

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI ‘F’ BENCH,

Before: SHRI N.K. BILLAIYA, & MS ASTHA CHANDRA

For Appellant: Shri Ankit Madnani, CA
For Respondent: Shri P.N. Barnwal, CIT-DR
Hearing: 30.10.2023Pronounced: 03.11.2023

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-

1.

This appeal by the assessee is preferred against the order of the ld. CIT(A) - 27, New Delhi dated 15.07.2019 pertaining to A.Y. 2015-16.

2.

The solitary grievance of the assessee is that the ld. CIT(A) erred in upholding the disallowance of interest amounting to Rs. 14,26,981/- u/s 37 of the Income-tax Act, 1961 [the Act, for short].

3.

Briefly stated, the facts of the case are that during the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has paid interest of Rs. 28,42,413/- on loans. The Assessing Officer further noticed that the assessee had earlier raised loan of Rs. 2.25 crores from Tata Capital Housing Finance Limited for purchase of property belonging to his wife.

4.

The Assessing Officer found that new loan had been raised for repayment of old loan and came to the conclusion that the loan was not utilised for the purpose of business and proceeded by disallowing the interest on the same.

5.

Before the ld. CIT(A), the assessee contended that the loan raised from Tata Capital Housing Finance Limited was partly utilized for the purchase of property and the balance amount was utilized in the proprietary business M/s Hans Raj Jewellers.

6.

On these facts, the ld. CIT(A) was of the opinion that the loan raised from IDBI and Standard Chartered Bank was partly utilized for repayment of loan from Tata Capital Housing Finance Limited and partly for the purposes of business of the assessee and was of the opinion that the component of loan was diverted between housing and business and concluded by holding that the interest charged should be allowed proportionately and accordingly, restricted the disallowance of interest to Rs. 14,26,981/-.

7.

After giving thoughtful consideration to the findings of the ld. CIT(A), we are of the considered opinion that the ld. CIT(A) has very pragmatically and logically restricted the disallowance of interest, which calls for no interference.

8.

In the result the appeal of the assessee in is dismissed.

The order is pronounced in the open court on 03.11.2023.

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