TMI Blog2016 (1) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the assessee had borrowed the amount for acquiring the property, as a necessary corollary, it is held that the assessee had rightly been allowed deduction of ₹ 10,00,000/- by the Tribunal as interest paid thereon under Section 24(1)(vi) of the Act. The judgment in Sunil Kumar Sharma's case (2002 (2) TMI 91 - PUNJAB AND HARYANA High Court ), supported the case of the assessee wherein it was held that the interest portion of the installment of the purchase price of let out property was allowable as deduction under Section 24(1)(vi) of the Act. - Decided against the revenue - ITA No. 634 of 2008 (O&M) - - - Dated:- 8-9-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN., JJ. For The Appellant : Mr. Tajender K. Joshi, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order dated 26.11.1999 (Annexure A-I) disallowed the said deduction as the assessee had not purchased/constructed any building from the funds on which the interest was paid. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), Faridabad [hereinafter referred to as the CIT(A) ]. The CIT(A), Faridabad vide order dated 5.3.2004 (Annexure A-II) while partly accepting the appeal of the assessee upheld the disallowance of ₹ 10,00,000/- under Section 24 (1)(vi) of the Act. Being dissatisfied with the order, Annexure A-II, the assessee filed the appeal before the Tribunal, who vide order dated 28.9.2007 (Annexure A-III) allowed the appeal and set aside the finding of the CIT(A) by holding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 10,00,000/- paid by the assessee on the borrowed funds satisfied the requirements of clause (vi) of sub-section (1) of Section 24 of the Act. 7. The Assessing officer had disallowed the claim of the assessee for deduction of interest at ₹ 10 lacs under Section 24(1)(vi) of the Act which was upheld by the CIT(A). However, the Tribunal while reversing the said orders of the Assessing Officer and the CIT(A) held that the assessee has fully justified the claim for deduction of interest under Section 24(1)(vi) of the Act. The Tribunal concluded that as per agreement dated 20.11.1975, the assessee had mortgaged its property which created a charge over the assets of the company and the said liability continued. Subsequently, vide agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer was, therefore, not justified in holding that since the assessee had not borrowed the amount for acquiring the property, the conditions of Section 24(1)(vi) are not satisfied. In our view the Assessing Officer as well as the learned CIT(A) have not properly considered the conditions in the agreement. On perusal of the relevant clauses of the agreement, the intention of the parties becomes very clear. The purchaser purchased the property of the company by undertaking the liability for paying the remaining unpaid loan of the financial institutions. Section 24 deals with deduction from income from house property. As per clause (b) of Section 24 of Income Tax Act, the deduction is permissible on account of interest where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letting out the property. In the balance sheet of the assessee company as well as in the audit report, the facts and figures relating to quantum of interest and rental income have been specifically given. Thus, there is a direct nexus between the rental income and the interest liability paid by the assessee. In our opinion, therefore, the assessee fully qualifies for the claim of deduction. 8. Nothing could be shown by learned counsel for the revenue that there was any perversity in the finding of fact recorded by the Tribunal. The Assessing Officer as well as the CIT(A) had wrongly adjudicated that since the assessee had not borrowed the amount for acquiring the property, it was not entitled to deduction under Section 24 (1)(vi) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
