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IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `E' NEW DELHI
BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER
SHRI T. S. KAPOOR, ACCOUNTANT MEMBER
ITA No.6469/Del/2018
Assessment Year:2015-16
Shri Manik Singh, Vs. Dy.C.I.T.,
S/o Dr. Meharban Singh, Circle-2,
A-47, Sector 31, Noida.
NOIDA.
PAN:AHJPS 6020 L
(Appellant) (Respondent)
Appellant by Shri Ankur Goel, Advocate
Respondent by Ms. Pramita M. Biswas, CIT (DR)
Date of hearing 18/04/2019
Date of pronouncement 18/04/2019
ORDER
PER T. S. KAPOOR, A.M.
This is an appeal filed by the assessee against the order of Learned
CIT(A) dated 31/05/2018. In this appeal the assessee has raised the
following grounds:
"1. The learned DCIT erred in law and on facts while
passing the assessment order on 20/11/2017 u/s 143(3) of the
Act and has not justified in rejecting the computation made by
the appellant and in estimating the income by applying
assumptions and presumptions and wrongly disallowed the
interest paid on secure loan on the wrong assumption as
investment in house property, "self-residential purpose".
2. The learned AO erred in law and on facts in passing the
assessment order u/s 143(3) of the Act as erroneous based
on assumption and presumption as interest paid on secured
loan taken from bank for the purpose of business and invested
in giving loan, has to be allowed as expenditure against the
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income from interest. The LD AO has erred on facts and in law
in treating the loan for construction of residential house merely
because it was secured against mortgage of residential house.
3. Assuming while denying that the income from interest
on loans advanced which to be taxed under section 56 as "
income from other sources", the corresponding interest paid
on secured loan raised from bank has to be allowed as
deduction on matching principle.
4. The LD A.O has erred on facts and law in treating the
secured loan taken from bank against property wrongly as
housing loan for construction of house property when it was
not so factually.
5. The LD AO has no jurisdiction under section 143(3) to
change the character of interest earned and interest paid on
the same amount.
6. Independent verification was not carried out by the LD
AO when there was a doubt on the claim, if any, after
considering the evidence submitted by the appellant which in
this case was not considered necessary by the assessing
officer after examination of the books of account and records
of the relevant period."
2. The brief facts, as noted in the assessment order, are that the
assessee is an individual and it had taken a housing loan of Rs. Two crore
and instead of utilizing the money for housing the assessee advanced the
amount to M/s Proplarity Infraventure Ltd. wherein he was a director. The
assessee earned interest from the company M/s Proplarity Infraventure
Ltd. against which he claimed the deduction of interest paid to bank u/s 57
of the Act and offered the balance for taxation. The Assessing Officer held
that the assessee had taken loan for self-residential purposes as
mentioned in the sanction letter and as per the terms and conditions of
such loan, the assessee was entitled to use this amount for which it was
sanctioned. The Assessing Officer further held that the assessee had
invested the amount taken as advance from bank in the company which
was engaged in the business of sale and purchase of residential flats
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therefore, the Assessing Officer further held that instead of deduction u/s
57 of the Act, the assessee could have claimed deduction only u/s 24(b) of
the Act and therefore, he made the disallowance. The Learned CIT(A)
though upheld the order of the Assessing Officer but he held that since it
had not made purchase of any property therefore, deduction u/s 24(b) was
also not available to the assessee. He further held that since the amount
was not taken for any business purpose therefore, the assessee was also
not entitled to deduction u/s 37 of the Act. Aggrieved, the assessee is in
appeal before us.
3. Learned A.R. invited our attention to the bank statement, placed at
page 28 of paper book, and submitted that assessee had taken housing
loan on 27/09/2013 and on 28/09/2013 the exact amount was transferred
to the company as unsecured loan on which the assessee had earned
interest and in this respect our attention was invited to page 41 of the
paper book where copy of computation of income was placed. Learned
A.R. specifically invited our attention to the fact that interest from the
company amounting to Rs.30,83,754/- was declared by the assessee
against which the interest paid to bank was claimed as deduction u/s 57 of
the Act. Therefore, it was prayed that it was not a case of claim u/s 24(b)
or 37 and rather it was a claim of expenses u/s 57 of the Act and therefore,
it should have been allowed by the authorities below.
4. Learned D.R., on the other hand, supported the orders of the
authorities below.
5. We have heard the rival parties and have gone through the material
placed on record. We find that it is a fact that the assessee had obtained
housing loan from AXIS Bank but the proceeds of the housing loan were
not utilized for purchasing any housing asset but it was advanced to a
company in which the assessee was also a director. The assessee had
declared interest income from the company which is apparent from page
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41 of the paper book where a copy of computation of income is placed.
Against the income of interest, the assessee had claimed interest
expenditure which has been paid to the bank therefore, the assessee had
claimed the interest expenditure as expenses under the head `income from
other sources' u/s 57 of the Act. The authorities below have ignored this
aspect. The assessee before the Learned CIT(A) has specifically taken a
ground for allowance of claim u/s 57(iii) on which Learned CIT(A) has not
given any finding. Therefore, we deem it appropriate to remit the issue
back to the office of Learned CIT(A) who should pass a speaking order on
the specific ground taken by the assessee which is the claim u/s 57(iii) of
the Act. Needless to say the assessee will be provided reasonable and
sufficient opportunity of being heard.
6. In the result, the appeal of the assessee stands allowed for
statistical purposes.
(Order pronounced in the open court on 18/04/2019)
Sd/. Sd/.
( H. S. SIDHU ) ( T. S. KAPOOR )
Judicial Member Accountant Member
Dated:18/04/2019
*Singh
Copy of the order forwarded to :
1. The Appellant
2. The Respondent.
3. Concerned CIT
4. The CIT(A)
5. D.R., I.T.A.T.,
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