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TMI Blog2023 (3) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO does not survive. Therefore, for this reason alone, the allowance of claim of deduction under section 24(b) of the Act of the interest paid by the assessee is held to be sustainable in law. No reason to deal with the arguments of the DR which are in the context of different set of facts which are not present in the case before us. The entire arguments of the ld.DR are raised on the fact that the interest has been paid by the assessee on a fresh loan taken to repay the original loan. Since the facts in the present case are not so, dealing with the same is only an academic exercise, and we see no reasons therefore to deal with the same. Decided against revenue. - ITA No.163/RJT/2016 - - - Dated:- 22-3-2023 - Smt.Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Assessee : Shri Fenil Mehta, AR For the Revenue : Shri Shramdeep Sinha, ld.CIT(DR) ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER The present appeal has been filed by the Revenue against order passed by the Commissioner of Income Tax(A)-1, Rajkot (in short referred to as ld.CIT(A) under section 250(6)of the Income Tax Act, 1961 ( the Act for short) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the said facts as brought out at page no.3 of the assessment order as under: (i) The assessee company was incorporated on 4th November 2004 and its entire share capital was owned by JP Infrastructure Private Ltd. (JPIPL). The entire cost of construction along with cost of land was born by JPIPL. (ii) IL FS Milestone Fund-1 (a Venture Capital Fund) purchased entire shares from JPIPL on 29.03.2008 and trustees of the Fund became owner the assessee company. (iii) The assessee company has issued 25,54,783/- 18% Optionally Fully Convertible Debentures of 100 fully paid raising Rs.25,54,78,300/- The proceeds of debentures were utilized for funding additional cost construction of shopping mall. (iv) In FY 2009-10 (A.Y. 2010-11), assessee company again issued 14,89,67,078/- 18% Optionally Fully Convertible Debentures of 1 fully paid raising Rs. 14,89,67,078/- The proceeds of these debentures were utilized for repayment of outstanding liability of JPIPL. (v) Assessee company has paid Rs. 7,28,00,166/- as interest to the fund which has been claimed as expenditure from the income from house property. 7. Referring to the above, the ld.counsel for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an was with respect to old provision of section 24(1)(vi), which since then had been replaced with new section 24(b). The applicability of the said CBDT was to be restricted only to the old section and would not apply to the new section in view of insertion of third proviso therein to which our attention was pointed out. 10. The ld.counsel for the assessee, on the other hand, countered by saying that, ITAT in the said order dealt with all these contentions raised by the ld.DR. He further pointed out that the ld.DR has mis-appreciated the facts and circumstances of the case, and has misunderstood that claim of the assessee to interest. He pointed out that the interest did not pertain to a fresh loan taken for repayment of an original loan, but the loan taken was for repayment of liability incurred on construction of the house property only. He pointed out that all evidences to bring out this fact were placed before the ld.CIT(A) by way of pointing out that original shareholders of the company, JPIPL had undertaken the construction of a Mall and rental income of which had been returned as income from house property, and the liability of the assessee with respect to JPIPL construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f construction of the building by the JPIPL The assessee submits that the interest paid on the borrowed money for the purpose of repayment of existing liability is allowable as deduction in computing income from house property as per provisions of section 24(b) of the Incometax Act, 1961 (the Act), d) Again reiterate the fact that, as discussed earlier in show cause and our contention, we submit that, there was introduction of capital in the form of OFCD to pay the OUTSTANDING LIABILITY OF THE CONSTRUCTION OF MALL BUILDING. To justify our claim we attached herewith the copy of the ledger account of J P Inf. P. Ltd. to whom all these payment made against liability incurred by the company for the construction of the mall building. To summaries the fact of application of OFCD fund we submit the brief facts of the case as under: Source of Fund Date Amount Rs. Application of Fund Date Amount Rs. IL FS- M Fund- 1 19.11.2007 5,00,00,000 JPIPL (SC) 19.11.2007 1,46,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14,89,67,077-67 11. He thereafter drew our attention to the findings of the ld.CIT(A) also at page no.10 of the order as under: 6. I have duly considered the submissionof the appellant and also gone through the discussion made in the assessment order. In all the grounds of appeal, only issue involved is whether interest paid on additional loan taken in the form of debenture is allowable or not u/s.24(b). I am of the considered view that as the additional loan taken in the form of debentures issued has been utilized to pay the existing liabilities of construction company M/s. J.P. Infrastructure Pvt. Ltd.(JPIPL) which was taken over by the appellant ;company. The erstwhile JPIPL was constructing this Shopping Mall. Hence, the liabilities taken over by the appellant company is towards or related to the construction of Shopping Mall only. And additional loan taken by the appellant to repay the balance liability of JPIPL cannot be said to be not utilized for construction of the Shopping Mall as the view taken by the AO who in turn has disallowed the interest on this loan. The view taken by the AO is completely wrong and contrary to the facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repaying this liability.Copy of ledger account of JPIPL was also placed before us at P. B 33-82. Considering the fact that even the AO noted the OCD being utilized for payment of outstanding liability of JPIPL which the assessee demonstrated as pertained to construction expenses, we find no infirmity in the findings of the Ld.CIT(A) that the loan was utilised not for repayment of an earlier loan but for a liability for construction of property. The ld.DR has been unable to controvert this fact before us. We therefore agree with the Ld.CIT(A) that the loan can be said to be utilized for construction of property and interest thereon accordingly is allowable u/s 24(b) of the Act. 15. In view of this uncontroverted finding of fact the basis for disallowing interest expenses by the AO does not survive. Therefore, for this reason alone, the allowance of claim of deduction under section 24(b) of the Act of the interest paid by the assessee of Rs.7,28,00,166/- is held to be sustainable in law. 16. Having held so, we see no reason to deal with the arguments of the ld.DR which are in the context of different set of facts which are not present in the case before us. The entire argume ..... X X X X Extracts X X X X X X X X Extracts X X X X
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