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2017 (1) TMI 672 - AT - Income TaxDisallowance made out of interest expenditure - Held that:- During the year under consideration the assessee has withdrawn a sum of Rs. 1.70 crores only from out of the bank overdraft account. In the case of Reliance Utilities & Power Pvt. Ltd (2009 (1) TMI 4 - BOMBAY HIGH COURT ) held that the disallowance out of interest expenditure is not called for when the assessee has got sufficient own funds. Further it was held that where the assessee has own funds as well as borrowed funds, a presumption can be made that advances given for non business purposes have been made out of own funds. In our view, the principles laid down in the above said case can be conveniently applied in the instant case also. Accordingly, we hold that withdrawal of Rs. 1.70 crores made by the assessee should be considered as having been made out of capital only. In that view of the matter, we find merit in the contention of the assessee that there is no requirement to make any disallowance out of interest expenditure. Non-granting of deduction of interest paid on housing loan - deduction allowable u/s 24(b) - Held that:- This issue requires fresh examination at the end of the Assessing Officer, since the Assessing Officer himself has changed the character of the Goregaon flat, i.e. as against the claim of the assessee that the Goregaon flat is self occupied property, the Assessing Officer has treated the Prithvi flat as self occupied property. Now, the learned CIT(A), having directed the AO to treat the Goregaon flat as deemed to be let out, has given a finding that the Goregaon flat is not fit for occupation. Hence there is contradiction in the order given by the Ld CIT(A). Due to change in the character of Goregaon flat, the deduction allowable u/s 24(b) requires reconsideration, since the assessee is also putting forth claim for deduction of entire amount of interest expenditure. Under these set of facts, the determination of Annual letting value, if the Goregaon flat is accepted as deemed to be let out, is required to be made. If it is held that the said flat is not fit for renting out, then there is no requirement to treat the same as deemed to be let out. Since there is confusion about the character of flat, we are of the view that these issues require fresh examination. Accordingly we set aside the order passed by the learned CIT(A) on these issues and restore the same to the file of the Assessing Officer with the direction to examine these issues afresh in accordance with the law after affording adequate opportunity of being heard to the assessee.
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