9911796707
TMI Blog2023 (11) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the relevant documents were not filed before the AO/Ld. CIT(A) and for the first time some additional evidences has been filed. Therefore, this issue is restored back to the file of the AO for denovo adjudication to consider to whether, the deduction claimed u/s 24(b) of the Act is allowable or not. Addition on account of deemed rent of the flat at Borivali - assessee replied that his employees are occupying the flat - AO noted assessee that he had more than one house property and he is not offering the deemed lettable value (ALU) of this property - AO noted that the assessee failed to produce any supportive evidences which proves that house was occupied by his employees and he further noted that assessee has not debited any expenses in Profit and Loss account for perquisite in the form of rent- free accommodation provided to the employees and also assessee has failed to establish employer-employee relationship about the person who was supposed to be residing in that apartment - HELD THAT:- AO found that assessee has not debited any expenses in P L for perquisites provided to employee. So, AO computed the ALV of the house property. On appeal, the Ld. CIT(A) observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and exclusively for the purpose of making or earning of income other sources i.e. amenity charges and FD interest. Unless assessee shows that purpose of borrowing from three persons was for making or earning amenity income or interest from FD, the claim of interest expenses to these persons cannot be allowed and so it is confirmed. Alternate contention assessee that since the AO in the assessments made u/s 147/143(3) of the Act for earlier years ie. AY. 2008-09 and AY. 2009-10 has accepted the interest deduction u/s 57(iii) of the Act and as per Rule of consistency the claim should be allowed , cannot be accepted for the reasons that in those orders [passed by the AO u/s 147/143(3) of the Act] which were re-assessments made after re-opening the assessment pursuant to the search happening in premises of Mukesh Chokshi, and the AO had looked into the accommodation entry in the form of purchase of shares of M/s. Alchemist Ltd. From perusal of the order, it is not discernable as to whether the AO has scrutinized the deduction claimed u/s 57(iii) of the Act and unless the AO had securitized the claim which fact assessee failed to demonstrate before this Tribunal, such a contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim and added it under the head income from the house property . Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to confirm the action of AO. Aggrieved, the assessee is before this Tribunal. 5. Assailing the action of Ld. CIT(A), the Ld. AR of the assessee submitted that the A.O. has erred in disallowing the interest claimed as expenditure under section 24(b) of the Act without considering the fact that the third proviso to section 24(b) of the Act is not applicable to the Appellant's case. According to Ld. AR, third proviso to section 24(b) specifically mandates for furnishing of the interest certificate from the person to whom any interest was payable on the capital borrowed for the purpose of such acquisition or construction of the property which are referred to in section 23(2) of the Act. And the property in question i.e., property in Surat, has been let out to a party on rental basis, and the said property, by no means, can be considered as property falling within the scope of section 23(2) of the Act. And since the said property is not covered by the provisions of section 23(2) of the Act, the proviso, including the third proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al borrowed for acquiring/construction/re-construction of the shop at Surat. Be that as it may, it is admitted fact that the relevant documents were not filed before the AO/Ld. CIT(A) and for the first time some additional evidences has been filed. Therefore, this issue is restored back to the file of the AO for denovo adjudication to consider to whether, the deduction claimed u/s 24(b) of the Act is allowable or not. The AO to give proper opportunity to assessee to furnish relevant documents to substantiate that interest claimed by him is pertaining to the capital borrowed for construction/acquiring the property at Surat; and after considering the relevant evidences filed if any, and the submission of assessee, and the discussion (supra), the AO to decide the claim in accordance to law. 7. Ground no. 2 of assessee is against the action of the Ld. CIT(A) confirming the addition of Rs. 1,68,000/- on account of deemed rent of Rs. 2,40,000/- of the flat at Borivali. 8. The AO noted from perusal of the personal balance-sheet of assessee that he had more than one house property; and further noted that he was not occupying house property/ flat at Borivali (Star Apartments Flat). So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant submits that the addition under section 23 of the Act is not justified and the same be deleted. The Ld. DR relies on the decision of the Ld. CIT(A) and does not want this Tribunal to interfere with the impugned action of Ld. CIT(A). 10. I have heard both the parties and perused the records. It is noted that the assessee has more than one house property which fact is discernible from perusal of his personal balance-sheet. On a query from AO as to why assessee is not offering income from house property, assessee claimed that house/flat (Star Apartment) has not been given on rent rather it is occupied by his employees (of Manav Jewellers). When asked by the AO to prove his contention, the assessee failed to place any supporting evidence that star apartment flat was occupied by his employees. Moreover, AO found that assessee has not debited any expenses in P L for perquisites provided to employee. So, AO computed the ALV of the house property. On appeal, the Ld. CIT(A) observed that only one property can be claimed by assessee as self-property under the Act and noted that assessee s claim that flat was occupied by employees was not accepted by AO because the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s claimed expenses of telephone, mobile, conveyance, car etc for entire year, which according to him was unreasonable; and that expenses are not incurred wholly and exclusively for business purpose; and that the assessee failed to justify the claim though asked to by AO vide notice dated 04.01.2016. Therefore, AO was of the opinion that personal element in such expenditure cannot be ruled out and he partly disallowed the claim. 14. Facts stated above are not repeated for the sake of brevity. Assessee an individual who is in the business of jewellery has transacted in gold/bullion albeit for a day in the relevant year and has shown income from it to the tune of Rs. 1,38,307/-; and has claimed expenditure of Rs. 2,74,270. And the AO has disallowed Rs. 1,65,016/- out of such expenditure mainly on the ground that assessee has carried out business/trading in bullion only for a day and therefore assessee s claim of expenditure is unreasonable and unjustified. Moreover, according to AO, personal expenses cannot be ruled out in the expenditure claimed viz telephone, mobile, motor car expenses etc. Therefore, he allowed only expenditure of Rs. 1,09,254/- (Rs.2,74,270/- Rs. 1,65,016/-) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, HDFC Bank and Manav Jewellers to acquire property at J.P. Infrastructure property, Surat which was let out on rental basis to M/s. Trent Ltd. At the time of letting out the said premises, two separate agreements were executed: (i) lease agreement and (ii) amenities agreement (Pages 101 to 107 and 108 to 128 of the paper book). According to Ld. AR, AO s action of attributing Rs. 8,15,628/- to the lease of property was not justified. Hence, the disallowance made by the A.O. ought to be deleted. In addition to the above, the Appellant submits that he has been consistently applying the same computation while declaring his income for A.Y. 2008-09 and 2009-10. According to him, the A.O., for A.Y. 2008-09 and 2009-10, has accepted deduction claimed by the Appellant under section 57(iii) of the Act by passing assessment orders under section 143(3) r.w.s. 147 of the Act without making any additions or disallowances for those respective years. In order to substantiate the same, the Applicant furnished the statement of income, personal capital account and Balance Sheet as well as the assessment order for the A.Y. 2008- 09 and 2009-10 (annexed at Pages 294 - 311 in the paper book II i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid three (3) persons were laid out or expended wholly and exclusively for the purpose of making or earning of income other sources i.e. amenity charges and FD interest. Unless assessee shows that purpose of borrowing from three persons (supra) was for making or earning amenity income or interest from FD, the claim of interest expenses to these persons to the tune of Rs. 3,82,476/- cannot be allowed and so it is confirmed. 19. Coming to the alternate contention assessee that since the AO in the assessments made u/s 147/143(3) of the Act for earlier years ie. AY. 2008-09 and AY. 2009-10 has accepted the interest deduction u/s 57(iii) of the Act and as per Rule of consistency the claim should be allowed, cannot be accepted for the reasons that in those orders [passed by the AO u/s 147/143(3) of the Act] which were re-assessments made after re-opening the assessment pursuant to the search happening in premises of Mukesh Chokshi, and the AO had looked into the accommodation entry in the form of purchase of shares of M/s. Alchemist Ltd. From perusal of the order, it is not discernable as to whether the AO has scrutinized the deduction claimed u/s 57(iii) of the Act and unles ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
