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TMI Blog2018 (1) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... Disallowance of the claim of interest on housing loan raised by the assessee u/s 24(b) - Held that:- When the assessee, viz Smt. Shardaben Bhavani, Mr. Dharmesh D. Bhavani (son of the assessee) and Sh. Devaram C. Bhawani (husband of the assessee) are the joint owners of the flat and had as co-borrowers raised the loan for purchase of the property, viz. Flat No. 2001 in Kent Garden Tower, Borivli, Mumbai, therefore, the entitlement of the assessee towards claim of deduction of such interest on housing loan shall be restricted to the extent of her 1/3rd share. We thus direct the A.O to allow deduction of the interest on housing loan to the assessee to the extent of 1/3rd of the aggregate of the interest payable on such loan during the year under consideration. The order of the CIT(A) sustaining the disallowance of the entire amount of the interest on housing loan claimed by the assessee u/s 24(b) is modified in terms of our aforesaid directions. The Ground of appeal No. 4 is partly allowed. Addition u/s 69 - Held that:- In the case of the present assessee nothing could be safely gathered from a perusal of the dumb notings in the impugned impounded document. We thus in the backdrop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction of interest on the housing loan borrowed for purchase of flat. 5. The learned CIT(A) erred in confirming the interest levied u/s 234A/B/C. 6. The appellant craves leave to leave to alter, to amend, to add, or to delete any or all of the grounds of appeal on or before the final hearing. 2. Briefly stated, the facts of the case are that the assessee who is a director of a company M/s Dev Sharda Developers Pvt. Ltd (hereinafter referred to as Company ) had filed her return of income for A.Y. 2006-07 on 31.03.2008, declaring total income at ₹ 1,25,821/- and agriculture income of ₹ 51,680/-. The return of income of the assessee was processed as such under Sec. 143(1) of the Act. 3. Survey proceedings were conducted by the investigation wing of the department u/s 133A(1) in the case of the company, viz. M/s Dev Sharda Developers Pvt. Ltd. During the post survey proceedings it was revealed that the assessee, viz. Smt. Shardaben D. Bhavani had during the F.Y. 2005-06 claimed to have purchased a Flat No. 2001 for a consideration of ₹ 42 lac. The investment in the purchase of Flat was shown by the assessee in her balance sheet at ₹ 45,36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said irrelevant and untenable explanation was trying to escape from the facts that had emerged during the course of the survey proceedings. Thus, the A.O on the basis of his aforesaid conviction made an addition of ₹ 36,75,826/- towards Unexplained investment made by the assessee for purchase of the aforesaid flat. The A.O further in the backdrop of his view that the interest certificate of Citi Finance was in the name of Sh. Dharmesh Deveram Bhavani and not in the name of the assessee, therefore, also disallowed her claim of deduction under Sec 24(b) of ₹ 1,50,000/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) after perusing the material available on record, therein took cognizance of certain material facts which had a strong bearing on the adjudication of the issue under consideration, viz. (i). the purchase agreement of the flat under consideration revealed that it was jointly purchased by the assessee alongwith her husband Sh. Devaram C. Bhavani and son Sh. Dharmesh D. Bhavani; (ii). that the deed of indemnity was executed between Sh. Dharmesh D. Bhavani and Citi Finance; (iii). the letter dated 09.08.2005 of Citi Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartmental representative (for short D.R ) relied on the orders of the lower authorities. 6. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We have perused the copy of the Agreement for Sale , dated. 23.06.2005 (Page 23 32) of the Paper book of the assessee (for short APB ) and find that the Flat No. 2001 in Kent Garden Tower, Borivli, Mumbai was purchased jointly by the assessee, her son Mr. Dharmesh D. Bhavani and husband Sh. Devaram C. Bhawani for a consideration of ₹ 42 lac. That a perusal of the agreement reveals that out of the total purchase consideration of ₹ 42 lac an amount of ₹ 2,10,000/- was paid vide a Cheque drawn on Bank of Baroda, Borivli branch, while for the balance amount of ₹ 39,90,000/- was agreed to be paid within a period of 45 days. We find that initially a loan of ₹ 37,50,000/- was raised from Citi Finance for purchase of the flat, which thereafter was foreclosed and the loan was taken over by Bank of Baroda (Page 17 of APB ). We find that the Certificate of foreclosure of loan of Citi Finanel, dated 25.08.2006 (Page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) and delete the addition of ₹ 36,75,826/-. 7. We now advert to the disallowance of the claim of interest on housing loan of ₹ 1,50,000/- raised by the assessee u/s 24(b) in her return of income, but disallowed by the A.O and thereafter sustained by the CIT(A). We are of the considered view that as observed by us hereinabove, as the flat under consideration had jointly been purchased by the assessee, viz. Smt. Shardaben Bhavani, Mr. Dharmesh D. Bhavani (son of the assessee) and Sh. Devaram C. Bhawani (husband of the assessee), therefore, there remains no occasion to hold that the assessee was the exclusive owner of the property, as claimed by her before the lower authorities. We are of the considered view that from a conjoint reading of Sec. 24 r.w s. 22 of the Act, it can safely be concluded that the deduction under Sec. 24(b) is to be allowed to the owner of the property as regards the interest payable on the amounts borrowed by him for acquiring, constructing, repairing, renewal or reconstruction of the property. Thus, in the backdrop of the aforesaid settled position of law, now when the assessee, viz Smt. Shardaben Bhavani, Mr. Dharmesh D. Bhavani (son ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as tenable u/s 68 or otherwise. 5. The learned CIT(A) further erred in confirming the additions /disallowance made by the Learned ITO (herein after called the AO) u/s 24(b) of the Income Tax Act, 1961 of ₹ 1,50,000/- for deduction of interest on the housing loan borrowed for purchase of flat. 6. The learned CIT(A) erred in confirming the interest levied u/s 234A/B/C. 7. The appellant craves leave to leave to alter, to amend, to add, or to delete any or all of the grounds of appeal on or before the final hearing. 2. Briefly stated, the facts of the case are that the assessee had filed her return of income for A.Y. 2007-08 on 06.02.2009, declaring total income of ₹ 5,59,970/- and agriculture income of ₹ 65,565/-. The return of income filed by the assessee was processed as such u/s 143(1) of the Act. The case of the assessee was thereafter reopened and a notice u/s 148, dated 25.08.2013 was issued to the assessee. 9. The A.O while framing the assessment observed that documents impounded during the course of survey proceedings conducted on M/s Dev Sharda Developers Pvt. Ltd. revealed that the assessee had received on money on sale of Flat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration. However, the CIT(A) not finding favour with the contentions of the assessee, being of the view that the assessee had failed to rebut the presumptions regarding the noting of the receipt of cash in the impounded document, therefore, upheld the addition made by the A.O. 11. The assessee being aggrieved with the order of the A.O had carried the matter in appeal before us. The ld. Authorised representative (for short A.R ) for the assessee at the very outset submitted that he was not pressing Ground of appeal No. 1. The Ground of appeal No. 1 is thus dismissed as not pressed. The ld. A.R took us through the Agreement to Sell , dated 26.09.2006 for the Flat No. 2001, Kent Garden, Borivali (W), Mumbai, which was sold be her during the year under consideration. The ld. A.R taking us through the relevant extract of the sale agreement at Page 18 of the APB , therein drew our attention to the fact that the area of the flat was 92 Sq. mtr. That in the backdrop of the said fact the ld. A.R took us through the impounded document, viz. Annexure A-2 Page 37 which was placed at Page 23 of the APB . The ld. A.R submitted that the A.O had drawn adverse inferences and allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69 on the basis of the document seized from the possession of assessee was rightly made by AO and sustained by the Tribunal. It was thus submitted by the ld. D.R that now when the assessee had failed to rebut the presumption drawn by the A.O on the basis of the notings in the diary impounded in the course of the survey proceedings conducted on M/s Devsharda developers, therefore, the addition of ₹ 54,20,000/- was rightly made by the A.O. 12. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that the addition of ₹ 54,20,000/- had been made in the hands of the assessee on the basis of the notings in Annexure A-2 Page 37 which is a page of a diary that was impounded during the course of survey proceedings on the company M/s Dev Sharda developers, in which the assessee was a director. We have deliberated at length on the notings mentioned in Annexure A-2 Page 37, and find that the adverse inference as regards receipt of on money ₹ 54,20,000/- was made by the A.O by referring to the figure of ₹ 96,20,000/- which stood mentioned as against a figure of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by two parties, revealing payment of a loan of ₹ 20 lac by the assessee to them and the manner as per which the amount was to be received back was seized from the premises of the assessee during the course of Search seizure proceedings. The assessee in the said case neither at the first available opportunity, nor at any subsequent stage of appeal or before the High Court denied the document, but had only claimed that the transaction mentioned therein was not given effect to. We find that it was in the backdrop of the aforesaid facts that the High Court held that once a document was seized in the premises under control of the assessee, the presumption under s. 292C as also that under s. 132(4A) followed, and it was for the assessee to rebut that presumption. The High Court observed that as in the case before it, neither the presumption created by the document was rebutted, nor had the assessee denied the loan amount, thus no infirmity could be found with the reasoning adopted by the Tribunal for upholding the correctness of the contents of the documents. We find that the facts of the case before us are distinguishable as against the facts involved in the case before the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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