9911796707
TMI Blog2014 (3) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... - thus, the assessee is allowed to have a deduction of interest u/s 24(b) of the Act – Decided in favour of Assessee. Set off of business loss against income from house property not allowed – Held that:- When the assessee resumed his business of purchase and sale of shares, it is not known whether the assessee sold any of shares held as stock-in-trade - It might be possible that the assessee when resumed trading in shares, he started with fresh purchase and sale of shares - All the facts need verification - The assessee will furnish requisite details of the shares held as stock-in-trade to the AO and the AO will verify the said details and decide the issue as to whether the assessee had temporarily suspended his business or there was complete stoppage of business by assessee – the assessee has not filed requisite details of total loss claimed by assessee – thus, the AO is directed for fresh adjudication – Decided in favour of Assessee. - ITA No. 5847/Mum/2011 - - - Dated:- 25-2-2014 - Shri I. P. Bansal And Shri Sanjay Arora,JJ. For the Appellant : Shri Vimal Punmiya For the Respondent : Shri M. L. Perumal ORDER Per I. P. Bansal, JM: This is an appeal fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of appeal are that the assessee had two properties which are stated to be let out to Saraswat Co- operative Bank Ltd. The ground floor of the premises Sailor building at Fort in Mumbai was purchased by the assessee in the year 1989 and let out to Saraswat Co-operative Bank Ltd. in the year 1994. There is no dispute in respect of the said ground floor of the premises. 3.1 The assessee purchased first floor of the premises of the said Sailor building at Fort Mumbai in the year 2002. The said property was also let out by the assessee to Saraswat Co-operative Bank Ltd. in January 2004. The assessee took advance of Rs. 51,00,000/- from Saraswat Co-operative Bank Ltd., which was equivalent to advance rent of 60 months bearing interest at the rate of 12% per annum chargeable at monthly outstanding balance. The assessee claimed that the said advance from Saraswat Co-operative Bank Ltd. was obtained as loan for purchase of the said property i.e. first floor of the said building and the interest paid on the said advance amount is deductible u/s 24(b) of the Income Tax Act. The AO did not accept the contention of the assessee and stated that the said advance was a rent and it could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the property as well as to carry out internal structural work to cater to the needs of the bank. The assessee submitted that he had paid the interest on the said advance received by it and, therefore it was a loan taken by the assessee for purchase of the property. The Ld. AR referred to section 24(b) of the Act and stated that it talks of borrowed capital and not talks of borrowed loan. Since the assessee paid the interest on the said advance taken by the assessee from Saraswat Co-operative Bank Ltd. at the rate of 12% per annum, which was utilized to purchase first floor of the premises, the assessee is entitled to claim interest payment u/s 24(b) of the Act.. 5.1 On the other hand Ld. DR relied upon the order of Ld. CIT(A). The Ld. CIT(A) submitted that the said amount was released in April 2004, whereas the assessee acquired the property in August 2002, therefore, it could not be said that the property was acquired by the assessee out of advanced funds given by the Saraswat Co-operative Bank Ltd. The Ld. DR further submitted that the Ld. CIT(A) has discussed this issue in her order that the rent advance on the first floor of the property was granted to the assessee only in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid amount advanced to the assessee is termed as rent advance but in all form it is an advance of loan to the assessee and a part of the said loan has been utilized by the assessee for purchase of first floor of the premises which was later on let out by the assessee to Saraswat Bank Cooperative Ltd. and the rental income has been derived by the assessee. Therefore, we are of the considered view that the assessee utilized the sum of Rs. 29,00,000/- for purchase of the immovable property i.e. first floor of Sailor building at Fort, Mumbai, and the assessee is entitled to get the deduction of the interest paid thereon u/s 24(b) of the Income Tax Act. In regard to further contention of the assessee that the balance amount was utilized by the assessee for carrying out repairs and changes in the internal structure of the said property to make it suitable for the bank to carry out its banking operations, the assessee has admittedly not furnished any evidence for undertaking the repair and renovation of the said property. At the time of hearing the Ld. AR also expressed his inability to produce the requisite evidence to support the claim for undertaking repair and renovation of the said p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing stock as on 31st March 2007 and opening stock as on 01.04.2006 is determined at Rs. 1,21,12,053/- and the entire amount consists of investment in various group companies of the assessee. The Ld. CIT(A) has further stated that the assessee carried on share trading activity up to assessment year 2004-05 and no details for assessment years 2005-06 2006-07 was furnished. That the assessee carried on his share trading activity during earlier years prior to assessment year 2004-05 and whatever business was carried on in the assessment year 2010-11, is entirely on account of fresh purchase made during that period. The Ld. CIT(A) concluded that the business carried on in the past came to an end and there was no business activity in the assessment year under consideration. Therefore, the Ld. CIT(A) rejected the loss claimed by the assessee. 8.1 CIT(A) has further stated that without prejudice to above, that no business was carried on by the assessee during the relevant previous year, the claim for deduction on account of various expenses is also examined. The total losses claimed by assessee is Rs. 27,89,564/-. The Ld. CIT(A) has stated that the assessee has not produced any suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from house property is not justified. He submitted that Ld. CIT(A) has stated that closing stock of shares as on 31st March 2007 is the opening stock as on 01st April 2009, it clearly shows that there was a suspension and not complete stoppage of business activities. That assessee had been computing his income under the head income from business and profession in all the assessment years, which shows that business activities were still on. The Ld. AR relied on the decision of Hon'ble High Court of Madras in case of Vairavan Chettiar vs Commissioner Of Income-Tax and (72 ITR 114) submitted that if the assessee had stopped its business due to lull in the market and inactivity for some period but kept its apparatus alive, it would be regarded as continuing the business activity and the losses/loss suffered by it has to be allowed as business loss. There may be long intervals of inactivity and a concern may still be a going concern, though it may, for some time, be inactive and dormant. The Ld. AR also referred the decision of the Hon'ble High Court of Bombay in the case of Hindustan Chemicals Works Ltd. Vs. CIT ( 124 ITR 561) and submitted that if there is no activity bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red view that it could not be said that the assessee had stopped its share business activity merely because assessee did not carry on any purchase and sale of shares in the assessment year under consideration and/or two years prior to the assessment year under consideration or three years subsequent to the assessment year under consideration. The closing stock as on 31st March 2007 has not been disposed by the assessee but the same was carried on from year to year till the assessee again started its business of purchase and sale of shares from assessment year 2009-10. Since the assessee has not filed details of shares held in stock, it is not known whether the assessee was holding shares which could be traded in open market. When the assessee resumed his business of purchase and sale of shares, it is not known whether the assessee sold any of shares held as stock-in-trade. It might be possible that the assessee when resumed trading in shares, he started with fresh purchase and sale of shares. All these facts need verification. The assessee will furnish requisite details of the shares held as stock-in-trade to the AO and the AO will verify the said details and decide the issue as to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
