2021 (10) TMI 1343 - AT - Income Tax

Disallowance u/s 36(1)(viii) - interest on housing loans - HELD THAT - As decided in own case 2021 (8) TMI 1321 - ITAT DELHI assessee stated that 62.75% in on account of interest on long term housing loan and worked out applying that percentage on the total business income calculated pertaining to long term housing loan and computed deduction @20% of Rs. 10.99 crores as deduction AO changed the above ratio from 62.75 % to 55.89% as he considered the total receipt of business for the purpose of working out proportion. In the present case the methodology adopted by the assessee is consistently followed for last eight years. Same was accepted by the revenue without any objection. The only issue is with respect to how the profit of the business for the purpose of long term housing finance shall be worked out. The only issue is that assessee is computed with respect to the total income with respect to the interest income whereas the Id AO has applied the above ratio to the total receipt. When the method has been consistently accepted for the above year we do not find any reason to defer from that. In view of this we do not find any infirmity in allowing the assessee claim of deduction u/s 36(1 )(viii) of the Act applying the ratio of 62.75%. - Decided in favour of assessee.

Summary

Issues:
1. Disallowance under section 36(1)(viii) of the Income Tax Act, 1961.

Analysis:
The appeal by the Revenue challenged the order of the Commissioner of Income-tax (Appeals) regarding the disallowance of Rs. 3,08,75,079 under section 36(1)(viii) of the Act. The Tribunal noted that a similar issue had been previously adjudicated in favor of the assessee for the assessment year 2010-11 and 2014-15. In both instances, the Tribunal upheld the assessee's claim of deduction under section 36(1)(viii) based on the methodology applied by the assessee for calculating the deduction. The Tribunal emphasized that the methodology had been consistently followed by the assessee and accepted by the revenue without objection. The Tribunal found no reason to deviate from the accepted method and dismissed the appeal by the Revenue based on the precedents and consistent application of the methodology.

The Tribunal referred to the previous decisions where the issue had been considered and relief had been granted to the assessee. The Tribunal highlighted that the consistent view taken by the first appellate authority and the Tribunal, along with the absence of any change in facts or law, led to the dismissal of the Revenue's appeal. The Tribunal upheld the findings of the Commissioner of Income-tax (Appeals) based on the established precedents and the application of the methodology by the assessee for calculating the deduction under section 36(1)(viii). Consequently, the appeal by the Revenue was dismissed, and the order of the Commissioner of Income-tax (Appeals) was upheld.

In conclusion, the Tribunal's decision was based on the consistent application of the methodology by the assessee for calculating the deduction under section 36(1)(viii) and the precedents where relief had been granted to the assessee in similar cases. The Tribunal found no infirmity in the order of the Commissioner of Income-tax (Appeals) and upheld the decision based on the established legal principles and factual circumstances of the case.