TaxTMI 
TaxTMI 
2013 (5) TMI 399
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.... addition of Rs. 7,78,183 on account of interest paid by the assessee on housing loan without appreciating the fact that the housing loan taken by the assessee from HDFC Bank has already been repaid in the immediate previous financial year and there was no outstanding loan existing on the beginning of the financial year relevant to the assessment year under consideration. 3. In doing so the learned CIT(A)-I, Kanpur has erred in law and on facts in ignoring the fact that the assessee has paid interest on the various unsecured loans taken from the members of the family and not housing loan from any banking channels. 4. That the order of the learned CIT(A)-I, Kanpur dt. 5th Aug., 2010 needs to be quashed and the order passed by the AO dt. 22nd Dec., 2006 be restored. 5. That the appellant craves leave to modify any of the grounds of appeal mentioned above and/or to add any fresh grounds as and when it is required to do so." 2. The first issue in this appeal relates to the direction of learned CIT(A) to allow the payment of Rs. 2,35,200 on account of maintenance charges. 3. The facts related to this issue, in brief, are that the assessee filed the return of income on 1st....
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....um of Rs. 1,19,55,350. (b) At the time of purchase of said commercial space it was already let out to M/s Mitsui OSK Lines (India) (P) Ltd. Mumbai, hence on its purchase by the appellant, the lease agreement with the tenant continued with modification in the name of the landlord and the rent from the date of purchase was being received by the appellant. (c) The commercial complex called Solitaire Corporate Park, has many commercial spaces occupied by different owners/tenants. However, the whole property is managed and maintained by M/s BPM Industries Ltd. Mumbai and they charged property tax a Rs. 4.40 per sq. ft. per month and maintenance charges of the building (c) Rs. 5.60 per sq. ft. per month from the appellant as per separate agreement. (d) The agreement with the tenant stipulated that the property tax and the maintenance charges payable to the society shall be borne by the owner as the same were duly compensated in the gross rent. (e) During the financial year 2003-04, the appellant paid a sum of Rs. Industries Ltd. as per details given below : Total area 3700 sq. ft. Particulars Rate per sq. ft. per month Amount (Rs.) Property tax 4.40 ....
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....tment is in appeal. 5. The learned Departmental Representative supported the order of the AO and further submitted that maintenance expenses cannot be claimed separately since 30 per cent deduction is allowable under s. 24 of the Act, therefore, the learned CIT(A) was not justified in deleting the addition made by the AO. 6. In his rival submissions the learned counsel for the assessee submitted that the payment made by the assessee towards municipal taxes and to enjoy the facility of lift, generator, common lighting etc. was deductible from the gross rent under s. 23 of the Act, therefore, the learned CIT(A) was fully justified in deleting the arbitrary addition made by the AO. The reliance was placed on the following case law : (i) C.A. Doshi vs. ITO (1999) 64 TTJ (Mumbai) 599 : (1999) 70 ITD 25 (Mumbai); (ii) Sharmila Tagore vs. It. CIT (2005) 93 TTJ 483 (Mumbai); (iii) Realty Finance & Leasing (P) Ltd. vs. ITO (2006) 5 SOT 348 (Mumbai). 7. We have considered the rival submissions and carefully gone through the material available on the record. In the present case, the assessee received gross rent of Rs. 28,38,000 and claimed the deduction on account of c....
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....rief, are that the assessee claimed a deduction of Rs. 7,78,183 on account of interest paid on loans taken for house property. The AO asked the assessee to justify the claim of deduction. The assessee submitted that the interest on loan taken for purchase of property has been deducted from income under the head house property. According to the AO, the assessee had not given details of loans utilized for purchase of house property but only submitted copy of various accounts and it was left for the AO to interpret copies of various accounts and to correlate the entries for purchase of house property. The AO pointed out that the assessee purchased flat measuring 2334.66 sq. mtrs. along with car parking in building known as Solitaire Seven on 8th July, 2002 from M/s Tandon Enterprises for a sum of Rs. 1,05,00,000 and also paid stamp charges at Rs. 13,80,350. The AO pointed out that the assessee made the payment of Rs. 77,70,000 and Rs.13,80,350 by taking loan from HDFC Bank Ltd. and the closing balance as on 31st March, 2003 in HDFC remained at Rs. 7,972. Thus, there remained no housing loan on the said date. The AO also pointed out....
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....n 12th March, 2003 to 31st March, 2003, the appellant repaid Rs. 28,80,000 to IDBI Bank after taking loan from two family members and three family HUFs as per the details given hereunder : Name of the party Date Amount (Rs.) Asha Agarwal 12-3-2003 5,65,000 Renu Agarwal 12-3-2003 5,70,000 Sheo Narain Agarwal, HUF 15-3-2003 6,95,000 Sheo Narain Agarwal, smaller HUF 15-3-2003 6,95,000 Amar Nath Agarwal HUF 15-3-2003 3,55,000 Total 28,80,000 Thus, as on 1st April, 2003, the following loans were outstanding attributable directly or indirectly to the purchase of property : Name of the party Principal amount Interest (Rs.) Total (Rs.) IDBI Bank Ltd. 61,19,800 0 61,69,800 Asha Agarwal 5,65,000 2,252 5,67,252 Renu Agarwal 5,70,000 2,811 5,72,811 Sheo Narain Agarwal, HUF 6,95,000 2,056 6,97,056 Sheo Narain Agarwal, S. HUF 6,95,000 2,056 6,97,056 Amar Nath Agarwal, HUF 3,55,000 1,050 3,56,050 Amar Nath Agarwal 0 1,58,583 1,58,583 During the financial year 2003-04, the appellant paid ag....
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....sessee by raising the loans. The reliance was placed on the following case law : (1) CIT vs N.C Budharaja & Co. & Anr. Etc. (1993) 114 CTR (SC) 420 : (1993) 204 ITR 412 (SC); (2) CIT vs. Tara Agencies (2007) 210 CTR (SC) 454 : (2007) 292 ITR 444 (SC); (3) Commr. Of Surtax vs. International Airport Authority of India (2002) 173 CTR (Del) 69 : (2002) 254 ITR 159 (Del); (4) Padmasundara Rao (Decd.) & Ors vs. State of Tamil Nadu & Ors. (2002) 176 CTR (SC) 104 : (2002) 255 ITR 147 (SC); (5) Prakash Nath Khanna & Anr. Vs. CIT & Anr. (2004) 187 CTR (SC) 97 : (2004) 266 ITR 1 (SC) 12. In his rival submissions the learned counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee raised the loans from HDFC Bank to purchase the house property. Later on another loans were raised to repay the loans taken from HDFC Bank. For that reason only, the closing balance of the loan from HDFC Bank as on 31st March, 2003 was nil. It was emphasized that there was direct nexus between the loans taken by the assessee and the purchase of house property as such, the interest paid on the loans was deductible under s. 24 of the....