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TMI Blog2014 (2) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances of the case in deleting the addition of Rs. 36,86,479/- made by the AO by application of the provisions of section 14A of the I.T. Act and considering, inter alia, that the interest bearing loan has also been diverted to further interest free loan. 3. The Ld. CIT(A) has erred in law and in facts and circumstances of the case in not properly considering as to whether the loan taken by the assessee was for the purpose of business as otherwise the same cannot be allowed. A.Y. 2005-06: "(i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 15,27,031/- by following the decision of Delhi ITAT in the case of ACIT Vs. Jindal Saw pipes Ltd. (Delhi) (2008) 118 TT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/148 not only disallowed the house tax expenditure but also made further addition by disallowing notional interest of Rs. 36,46,879/- for diversion of funds to exempt income generating assets. Aggrieved, assessee preferred first appeal challenging the action of assessing officer i.e. in reopening and making the addition on merits. 2.2. Ld. CIT(A) allowed the appeal of the assessee on both the counts by holding as under: Validity of 147 proceedings: (i) The assessee's argument was correct that the reasons for reopening were done only for the purpose of verification of house-tax receipts. Section 147 does not envisage the reopening for verification or further enquiries. Besides, assessing officer's action merely amounted to change of opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng exempt dividend income u/s 14A. 3.1. Aggrieved, assessee preferred first appeal. CIT(A) relied on the judgment of Hon'ble Supreme Court in the case of Rajasthan State Warehousing Corpn. Vs. CIT 242 ITR 450 for the proposition that if business of the assessee is one and indivisible, expenditure cannot be apportioned and part relating to income which is exempt cannot be disallowed. Thus in effect the earlier years decision was followed. 3.2. Further reliance was placed by CIT(A) on Cochin Bench of the ITAT in the case of Dhan Laxmi Bank 12 SOT 625 which in turn has relied on Rajasthan State Warehousing Corpn. (supra). Delhi ITAT in the cases of Maruti Udyog Ltd. Vs. DCIT 92 TTJ (Del) 987; and ACIT Vs. Jindal Saw Pipes Ltd. 118 TTJ 228, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.3. Aggrieved, revenue is before us for both the years. 4. Ld. DR apropos A.Y. 2004-05 contends that ld. CIT(A) erred while adjudicating the sufficiency of the reasons recorded for reopening the assessment. Reliance is placed on the ratio of decision in the case of Phool Chand Bajrang Lal 203 ITR 456 for the proposition that sufficiency of reasons of reopening cannot be examined. Further reliance is placed on Hon'ble Supreme Court judgment in the case of ACIT Vs. Rajesh Jhaveri Stock Brokers (P) Ltd. 291 ITR 500 for the proposition that 143(1) assessment is not an assessment. Further reliance is placed on the judgment in the case of Raymond Woollen Mills 236 ITR 34. 5. Ld. Counsel for the assessee on the other hand relied on Hon'ble Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. from A.Y. 2008-09 and not retrospectively. Thus, the reopening is ex facie bad in law. Order of CIT(A) is relied on. 5.1. On merits it is pleaded that there is no infirmity in the order of CIT(A) as on verification no interest bearing funds are held to have nexus with exempt income in both the years. 6. We have heard rival contentions and perused the material available on record. We find merit in the arguments of ld. Counsel. From the reasons recorded as reproduced above it clearly emerges that the assessing officer reopened the assessment in the name of verifying the house property payment/ receipts. Payment of house property tax are otherwise allowable as statutory deduction, more so when the income qua the same property is taxed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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