9911796707
TMI Blog2015 (8) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... d sufficient bank balance in their accounts before issuing cheques to the assessee which shows genuineness of the transaction as well as creditworthiness of the alleged creditors. In this situation, the addition made by the AO u/s 68 of the Act could not be held as sustainable and the same was rightly deleted by the CIT(A). - Decided in favour of assessee. Interest paid on the loan taken from the bank - whether to be capitalized and reduced from the sale consideration of the property while computing the capital gain as directed by CIT(A) - Held that:- Respectfully following the dicta laid down by the Hon’ble Jurisdictional High Court in the case of CIT vs Mithilesh Kumari (1973 (2) TMI 11 - DELHI High Court), we hold that the assessee is entitled for capitalization of interest actually paid by the assessee on the loan taken for purchase of said property provided the interest so proposed to be capitalized is not claimed as deduction under the head of income from house property. We are also of the considered view that the calculation and verification of the interest for the period between date of acquisition and date of sale of property has to be done at the end of AO. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PER CHANDRAMOHAN GARG, J.M. The appeal of the revenue as well as C.O. of the assessee have been filed against the order of CIT(A)-XXIV, New Delhi dated 30.05.2013 in Appeal No. 347/11-12 /120 for AY 2009-10. Revenue s appeal in ITA No. 4455/Del/2013 for AY 2009-10 2. The Revenue has raised following grounds in this appeal:- On the facts and circumstances of the case and in law CIT(A) has erred in- 1. Deleting the addition of ₹ 28,75,000/- made by AO u/s 68 of the Income Tax Act, 1961 as the assessee failed to prove the genuineness of the unsecured loan. 2. Deleting the addition when no confirmation has been filed either before the AO and the CIT(A) . 3. Deleting the addition on the basis merely that payment has been made through banking channel when no other evidence has been filed to establish the genuineness of the transaction. 3. Ld. DR also pressed application dated 5.3.2015 for admission of additional ground which reads as under:- 1. Allowing the interest of ₹ 12,82,571/- paid on loan taken from the bank to be capitalized and reduced from the sale consideration of the property while computing the capital gain by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee very well established that she has taken a loan of ₹ 15,75,000 from one Shri Manoj Kumar and of ₹ 13 lacs from one Shri Uttam Singh in addition to other unsecured loans along with details/confirmation. Ld. DR further submitted that the assessee vide her letter dated 31.10.2011 requested the AO to summon these creditors and inform their address but instead of making any further verification or examination or calling the respective creditors, the AO proceeded to make addition without any basis and wrongly held that these loans are not genuine. Ld. AR further submitted that the CIT(A) rightly considered confirmation and other relevant evidence submitted by the assessee and rightly held that both Shri Manoj Kumar and Shri Uttam Singh had sufficient bank balance before issuing cheques to the assessee, therefore, impugned addition was deleted by the first appellate authority. Ld. DR also placed rejoinder to the above submissions by the assessee and submitted that the assessee has deliberately concealed particulars of her income and despite summons issued to these creditors nobody attended nor the required details/confirmations, bank account and ITRs were filed, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Rekha Bansal. In the light of the above evidence, the addition of ₹ 28,75,000/- to the income of the appellant becomes untenable and the same is hereby deleted. 9. As per submissions of both the sides, it is amply clear that the AO made impugned addition in absence of details, confirmation, bank accounts and ITR copies of the alleged creditors Shri Manoj Kumar and Shri Uttam Singh. During first appellate proceedings, the CIT(A) granted relief to the assessee on the basis of information received from the respective banks of the creditors in compliance to the notice issued to these banks u/s 133(6) of the Act wherein the first appellate authority found that the alleged creditors had sufficient bank balance in their accounts before issuing cheques to the assessee. It is also pertinent to note that prior to calling bank statement copies by way of notice u/s 133(6) of the Act, the CIT(A) also issued summons to the respective creditors which were not complied and the CIT(A) also served a show cause notice proposing to impose penalty u/s 272A(1)(c) of the Act. In this situation, the CIT(A) was right in holding that the assessee discharged her onus by way of filing required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of interest to the assessee which was paid from the bank account of the assessee in Karur Vysya Bank. Ld. AR submitted that the CIT(A) was right in directing the AO to delete the addition to the income of the assessee under the head capital gains . 12. On careful consideration of above submissions, at the very outset, the AO denied the capitalization of the interest by holding that the interest claimed by the assessee is not an allowable expenditure as the properties in the names of the assessee s husband and the loan has been taken in the name of assessee s husband Shri Ajay Kumar Bansal. The CIT(A) granted relief to the assessee by observing that the evidence gathered u/s 133(6) of the Act from ICICI Bank, Home Loan Branch with regard to home loan given to the assessee and her husband explains that the repayment of loan has been made from the assessee s account with Karur Vysya Bank, Rohini Branch. From the statement of authorized representative of ICICI Bank, the CIT(A) also noticed that in the case of loan taken by ladies, bank has a policy of including names of their husband which appear first and the name of the female assessee appears later in the loan document. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enied the benefit of capitalizing this interest and reduce it the same from the sale consideration of the property. Accordingly, this addition to the income of the appellant under the head Capital Gains is hereby deleted. Although, the AO has correctly charged the Short Term Capital Gains on purchase and sale of properties under the appropriate head Capital Gains rather than under the head Other Sources as returned by the appellant, by showing her income of ₹ 3,56,169/- as miscellaneous Income. 14. In view of above, we observe that the AO denied capitalization of the interest while calculating capital gain because perhaps there was a confusion regarding name of the home loan account wherein the name of assessee s husband appeared first which created doubt in the mind of the AO, however, the CIT(A) called and gathered required evidence and information by invoking provisions of section 133(6) of the Act from ICICI Bank wherein it was revealed that the loan was taken jointly by the assessee and her husband amounting to ₹ 85 lakh and impugned interest was paid to the bank from the assessee s bank account in Karur Vysya Bank Ltd. At this juncture, we respectfully t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of acquisition of property in question subject to verification of following facts:- i) The calculation and verification of interest for the period between the date of acquisition of property and date of sale of said property, actually pertains to the amount of consideration/cost of acquisition at the time of purchase of property by the assessee. ii) The AO would allow the capitalization of interest subject to condition that the same was not claimed by the assessee as deduction during the relevant financial periods for calculation of income under the head of income from house property . Accordingly, additional ground no. 2 of the revenue is deemed to be allowed for statistical purposes for the limited purpose as indicated above. C.O. No. 43/Del/14 of the assessee 16. At the outset, ld. AR submitted that CO No. 1 and 4 are general in nature and assessee does not want to press CO No. 3, therefore, the same are dismissed as not pressed. The remaining sole CO NO. 2 of the assessee reads as under:- 2. The ld. AO has erred in law and facts while confirming the addition of ₹ 3,92,000/- to the returned income and not allowing the claim of vacancy allowance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO granted deduction @30% u/s 24(a) of the Act and calculated the net property income at ₹ 6,72,000 and after deducting rental income shown by the assessee from house property at ₹ 2,80,000/-, the AO made impugned addition of ₹ 3,92,000 to the returned income of the assessee. On appeal by the assessee, the CIT(A) upheld and confirmed the addition for want of proper evidence. About the fact of vacancy of seven months, on careful consideration of observations and findings of the authorities below, we note that tax can only be imposed on the rental income actually earned by the assessee. The rental income from house property cannot be admitted for want of negative evidence about the vacancy period of the property under consideration. In this situation, we are of the considered view that the issue requires proper verification and examination at the end of AO and we restore this issue to the file of AO with a direction that the AO shall verify and examine the issue afresh after affording due opportunity of hearing for the assessee and without being prejudiced from the earlier assessment and impugned order on this issue. Accordingly, cross objection no. 2 of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
