2019 (5) TMI 1708 - AT - Income Tax

Interest claim allowed under Section 24(b) for AY 2008-09 appeal; capital gains upheld for AY 2012-13.

Crimson Property Pvt. Ltd. Versus ITO Ward-5 (1) (3) Mumbai

Crimson Property Pvt. Ltd. Versus ITO Ward-5 (1) (3) Mumbai - TMI Issues Involved:1. Disallowance of business loss of Rs. 9,08,549.2. Disallowance of claim of interest under section 24(b).3. Determination of capital gains of Rs. 61,68,015.Issue-wise Detailed Analysis:1. Disallowance of Business Loss of Rs. 9,08,549:The assessee, a company engaged in leasing property, filed its return for AY 2008-09 declaring a total income of Rs. 3,22,161. The Assessing Officer disallowed the business loss of Rs. 9,08,549, which included expenses like depreciation, salary, and purchase of a motor vehicle for a new business venture. The CIT(A) confirmed this disallowance.The assessee argued that the expenses were incurred for developing another property, but this venture was unsuccessful. The revenue countered that the assessee did not provide documentary evidence to prove that the expenses were incurred wholly and exclusively for business purposes. The assessee had shown income under 'Income from House Property' and 'Income from Other Sources' and already claimed standard deduction under section 24(a).The Tribunal noted that the assessee failed to provide details or evidence of the new business venture, such as the name or municipal number of the property. The claimed expenses were already covered under the standard deduction. Consequently, the Tribunal found no merit in the assessee's claim and dismissed this ground of appeal.2. Disallowance of Claim of Interest Under Section 24(b):The assessee claimed interest on borrowed funds used to acquire a property known as Dhanwatay House. The Assessing Officer allowed the interest from the date of the agreement (31.03.2008) rather than the date of payment (14.02.2008). The CIT(A) upheld this decision, stating that the property was not in the assessee's ownership until 31.03.2008.The assessee argued that the interest should be allowed from the date of payment, as the property was acquired with borrowed funds. The Tribunal agreed, stating that the intention to let out the property and earn rental income was clear. Therefore, the interest should be computed from the date of payment. This ground of appeal was allowed, and the Assessing Officer was directed to compute the interest from 14.02.2008.3. Determination of Capital Gains of Rs. 61,68,015:For AY 2012-13, the Assessing Officer noted a reduction in the assessee's property investment and concluded that part of the property was surrendered back to Vedant Property P. Ltd., resulting in a capital gain of Rs. 61,68,015. The assessee argued that the amount received was equal to the acquisition cost, resulting in no capital gain. The CIT(A) confirmed the Assessing Officer's decision, noting the absence of documentary evidence for the transfer.The Tribunal reviewed the details and noted that the assessee failed to provide documentary evidence of the property transfer. The assessee's claim that the variation was due to capitalization of interest was not substantiated with evidence. Consequently, the Tribunal upheld the decision of the lower authorities and dismissed this ground of appeal.Conclusion:The appeal for AY 2008-09 was partly allowed, with the Tribunal allowing the interest claim under section 24(b) from the date of payment. The appeal for AY 2012-13 was dismissed, with the Tribunal upholding the determination of capital gains. The order was pronounced in the open court on 31/05/2019.