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TMI Blog2017 (3) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute that the assessee declared income under the head "income from house property". While computing income from house property the assesee claimed deduction of interest paid on loan borrowed for the purpose of construction of the house property u/s 24(b) of the Act of a sum of Rs. 2,28,31,800/-. There is no dispute that the property in respect of which interest expenses was claimed as deduction was originally acquired by a company by name M/s. Centre Point Reality P.Ltd after taking an advance of Rs. 29.22 crores from M/s. Patton International Ltd. Subsequently M/s. Centre Point Reality Pvt.Ltd got amalgamated with the assessee company w.e.f. 01.04.2006. The assessee thus became the owner of the house property. It is not in dispute apart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not satisfied. 5. The AO accordingly disallowed the proportionate interest as follows :- "Accordingly, interest of Rs. 1,00,12,365/- [ Rs. 1,72,18,169 x (Rs.11.63 crore)/(Rs.20 crore) ] is disallowed and added back to the total income of the assessee. [ Addition : Rs. 1,00,12,365/-] " 6. On appeal by the assessee the CIT(A) followed the decision of his predecessor in assessee's own case for A.Y.2009-10 wherein on an identical disallowance the CIT(A) held that the assessee was entitled to deduction u/s 24(b) of the Act on amounts borrowed and utilized to repay a loan that was borrowed for the purpose of acquisition of the property. Following the aforesaid order the CIT(A) deleted the addition made by AO. Aggrieved by the order of CIT(A) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO found that assessee has taken loan from SBM during the month of August, 2008 and repaid the loan of the holding company. The AO claimed that there is no provision under the Act to allow deduction of interest on a subsequent loan taken to repay the original loan. Therefore, he held that assessee-company was not entitled to claim deduction in respect of interest payable for fresh money borrowed to repay the earlier loan and accordingly, he disallowed. Before Ld. CIT(A) Ld. AR of assessee submitted that the fresh loan taken to repay the original loan was within the ambit of law and accordingly Ld. CIT(A) has deleted the addition which made by AO. It is also observed that no material has been brought on record by Ld. DR to controvert the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing previous years] [Provided also that no deduction shall be made under the second Proviso unless the assessee furnishes a certificate, from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by the assessee for the purpose of such acquisition or construction of the property, or, conversion of the whole or any part of the capital borrowed which remains to be repaid as a new loan. Explanation - For the purposes of this proviso, the expression "new loan" means the whole or any part of a loan taken by the assessee subsequent to the capital borrowed, for the purpose of repayment of such capital.]" From the aforesaid explanation, it is very much clear that the subsequent loan ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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