TMI Blog2012 (5) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Processing charges' as 'Interest' u/s 2(28A) - definition of 'interest' - held that:- processing charges have to be construed as part of interest in view of the definition of 'interest'. - Decided in favor of assessee. - IT Appeal Nos. 1715 (Mum) of 2008 & 3370 (Mum.) of 2010 - - - Dated:- 4-4-2012 - T. R. Sood And Vijay Pal Rao, JJ. Arvind Sonde for the Appellant. D. S. Sunder Singh for the Respondent. ORDER T.R. Sood, Accountant Member I.T.A.No.1715/Mum/2008 (By Assessee): In this appeal, the assessee has raised the following grounds : 1 ( a ) The learned Commissioner of Income-tax (Appeals) erred in upholding the action of the learned Assistant Commissioner of Income-tax (the Assessing Officer) in disallowing a sum of ₹ 1,19,55,318/- incurred by the appellant under the head Profits gains of business or profession. ( b ) The learned Commissioner of Income-tax (Appeals) erred in endorsing the observation made by the Assessing Officer that it is evident that the appellant has tried every possible way of reducing or proponing its tax liability or has adopted scrupulous methods to av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-selling the said properties. However, in the mean time, as a prudent businessman would do, the assessee company decided to give the said properties on leave licence basis. Accordingly, the assessee company entered into Leave Licence agreement with Daksh E Services Private Limited (in respect of units Nos. 401 501) and J P Morgan Services India Private Limited (in respect of units Nos.601, 701 801). The income received in respect of above properties has been offered under head Income from House Property . The assessee has been incorporated with the main object of carrying on business of buying and selling of property as specified in its Memorandum Articles of Association and profit on the same will be chargeable to tax under Section 28 of the Income-tax Act, 1961. An assessee carrying on business may utilize various assets for the purpose of business and with the help of these assets the assessee carried on business and makes profit. In the types business carried on by the assessee, it has to hold the properties to carry on its real estate business of buying and selling. However, till any good opportunity comes, it has given the said premises on lease to earn in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in this regard he relied on the decision of Mumbai Bench of Tribunal in the case of Govind S. Singhania v. ITO [IT Appeal No.4581(Mum) of 2006] and Sharmila Tagore v. Jt. CIT [2005] 93 TTJ 483 (Mum.). 5. On the other hand, the ld. DR submitted that the assessee has itself treated the income from leasing charges as income from house property and therefore only those deductions can be allowed which are provided under the 'income from house property'. Since u/s.24 only 30% of standard allowance and further deduction only on account of interest is provided, therefore, no further deduction can be allowed. In this regard, he strongly relied on the decision of Hon'ble Delhi High Court in the case of CIT v. H.G. Gupta Sons [1984] 149 ITR 253 (Delhi), Asstt. CIT v. Piccadily Hotels (P) Ltd. [2005] 97 TTJ 411/97 ITD 564 (Chd.) and another judgment of Hon'ble Punjab Haryana High Court in the case of Aravali Engineers (P) Ltd. v. CIT [2011] 200 Taxman 81/11 taxmann.com 291. He also submitted that the decision of Banwari Lal Anand ( supra ) cannot be followed because that was rendered for assessment year 1989-90 when sec. 24 had various clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular type of expenditure is not specifically provided to be deductible, deduction therefor cannot be claimed from out of the annual value. Neither 23 nor s. 24 provides for the deduction of the expenses incurred towards stamp duty or registration charges in respect of the lease. Again, the Chandigarh Bench of the Tribunal in the case of Piccadily Hotels (P) Ltd. ( supra ) observed as under : Income from house property - Annual value - Deduction for commission paid to brokers - There is no express provision regarding allowance of any, brokerage or commission for determining ALV of the property - It cannot be inferred that 'actual rent' in the term 'actual rent received or receivable' occurring in cl. (b) of s. 23(1) means net rent after allowance of expenditure in connection with rent - Statute does not empower the assessing authority or the assessee either to add or subtract anything from the ALV-Also, the plea of diversion by overriding title cannot be accepted as no obligation has been cast on the assessee to pay brokerage - Therefore, commission not allowable as deduction. The Hon'ble Punjab Haryana High Court in the case of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Delhi High Court in the case of H.G. Gupta Sons ( supra ). In any case, the latest decision on this issue in the case of Aravali Engineers (P) Ltd. ( supra ) is from Hon'ble Punjab Haryana High Court and the same has to be followed in preference to the decision of the Tribunal. Accordingly, we reject the ground raised before us. 7. In the result, the assessee's appeal is dismissed. ITA No.2072/Mum/2008 (By Revenue): 8. In this appeal, the assessee has raised the following ground : The learned CIT(A) erred in holding that processing fee for ₹ 30,00,000/- included under the head 'interest' is allowable deduction u/s.24 of the Income-tax Act, 1961. 9. After hearing both the parties, we find that during assessment proceedings the AO noticed that the assessee has claimed a sum of ₹ 30 lakhs on account of processing charges for the bridge loan availed from HDFC Bank Ltd. According to the AO, processing charges cannot be equated with interest expenses and the same was disallowed. 10. On appeal, the ld. CIT(A) held that as per the definition of 'interest' in sec. 2(28A), which is inclusiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been confirmed by the ld. CIT(A). 16. Before us, the ld. counsel of the assessee submitted that since it is a debatable matter whether such expenses can be allowed as a deduction under the head 'income from house property', therefore, penalty was not leviable. The very fact that various Benches of Tribunal have taken different views, it is clearly a debatable matter. Moreover, the assessee has not concealed any particulars of income or furnished inaccurate particulars thereof. The decision of Hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts (P) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC) is applicable. 17. On the other hand, the ld. DR strongly supported the order of ld. CIT(A). 18. After considering the rival submissions, we find force in the submissions of the ld. counsel of the assessee. Firstly, the assessee has not concealed any particulars of income or furnished inaccurate particulars thereof. The question regarding allowability of certain expenses from house property was at least debatable during the relevant point of time because few decisions were there in favour of the assessee also. Therefore, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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