2016 (1) TMI 228

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....o. 2212/DEL/2004 for the assessment year 1997-98. The appeal was admitted by this Court vide order dated 15.12.2008 for considering the question proposed in para 7 of the appeal which is to the following effect:- Whether, on the facts and in the circumstances of the case, the Hon'ble ITAT has erred in law in holding that the assessee company is entitled for the deduction u/s 24(1)(vi) though the borrowed capital was not utilized for acquisition, renewal, repair, construction or reconstruction of the property which had been let out but had utilized for acquiring entire equity share holding of the company, so as to transfer the control and management of the company? 2. A few facts necessary for disposal of the present appeal as narrate....

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....t attracted as the amount was not utilized for acquisition, renewal, repair, construction or reconstruction of the property. 4. On the other hand, controverting the aforesaid submissions, learned counsel for the assessee besides supporting the order passed by the Tribunal and relying upon the judgment in Commissioner of Income-Tax v. Sunil Kumar Sharma (2002) 254 ITR 103 submitted that the assessee had purchased the land and constructed building thereon for which the loan was taken and hence deduction under Section 24(1) (vi) of the Act was rightly allowed by the Tribunal. 5. After hearing learned counsel for the parties, we do not find any merit in the appeal. 6. Section 24(1)(vi) of the Act at the relevant time provided that where the ....

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.... findings recorded by the Tribunal read thus:- "13. We have carefully considered the facts and circumstances of the case and the rival submissions. As per the agreement dated 20.11.1975 the assessee company had mortgaged its property. The said mortgage created a charge over the assets of the company. The liability of the company continued. Subsequently vide agreement dated 15.10.1992 the property of the company stood transferred and as provided in clause (3) of the agreement which has been reproduced above, the land and building of the company was handed over to purchaser after the transfer of shares in favour. Condition for the payment of loan of financial institutions through Haryana State Electronics Corporation was for acquiring the p....

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.... of this loan liability will tantamount to the borrowing of the amount for acquiring the property. The term "interest on borrowed capital" as appearing in the old provision of section 24(1)(vi) will cover the interest paid by the assessee because the borrowed capital was utilized by the assessee for acquiring the property. The logic of the Assessing Officer that in the assessment year under consideration, the assessee had not borrowed funds or had not constructed the property out of the borrowed funds is not in consonance with the relevant statutory provisions. The terms of statutory provisions are to be construed to carry out the purpose and object behind such enactment and to advance the intention of the legislature. What is necessary is ....