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TMI Blog2011 (8) TMI 1212X X X X Extracts X X X X X X X X Extracts X X X X ..... o: 3713/Mum/2010. The only issue is whether the assessee is entitled to the deduction of ₹ 55,00,000/- being loan processing charges while computing the income from property. The brief facts in this connection are that the assessee acquired several properties in the relevant previous year at a total cost of ₹ 59,57,45,918/- from HDFC Limited. In order to acquire the properties, the assessee issued 5532 variable secured redeemable convertible debentures in favour of HDFC Property Fund and thus received a total sum of ₹ 55,32,00,000/-. From the properties the assessee declared a rent of ₹ 3,55,21,068/-. In respect of the borrowings through debentures, the assessee paid interest of ₹ 2,91,88,818/- and processing f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, repairing or renewing the property. Section 2(28A), which was inserted by the Finance Act, 1976, with effect from 1st June 1976 defines interest as interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized. It is seen from the definition that even a service fee paid in respect of the moneys borrowed is included in the definition of interest . The processing fee is charged by the lender since the processing of the loan application and connected documents involves a service rendered by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has invoked section 50C to hold that since the properties have been acquired at a much higher price than their market value, the borrowings to the extent of the difference between the price paid and the market value will not be considered as borrowings for the purpose of acquiring the properties. Whether such an action of the Assessing Officer is correct has come up before the Mumbai Bench of the Tribunal in the case of ITO vs. Grandeur Properties Pvt. Ltd., in ITA No: 2056/Mum/2010. By order dated 28th January 2011 (copy filed), the Tribunal has held as under: - 8. We have noted that there is no dispute that a borrowing by way of debentures, in respect of which interest is claimed as deduction, is duly utilized for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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