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TMI Blog2019 (4) TMI 2052X X X X Extracts X X X X X X X X Extracts X X X X ..... f deduction towards processing fees and pre-payment charges u/s 24(b) of the Act. For the assessment year 2013-14, the assessee has raised a ground for disallowance of Rs.25,77,78/- under the provisions of section 14A of the Act. 3. Since all these appeals are connected and relate to same assessee, they were heard together and disposed of by this common order. 4. For the sake of convenience, we shall take up the assessee's appeal for assessment year 2012-13 in ITA No.1649/Bang/2017 and the assessee has raised the following grounds of appeal: 1. The Order of the Learned Commissioner (Appeals) is not justified in law and on facts and circumstances of the case. 2. As regards disallowance of proportionate interest of Rs.2,44,76,557/-under section 24 (b) of the IT Act: 2.1. The Learned Commissioner (Appeals) is not justified in upholding the disallowance of proportionate interest claimed by the Appellant under section 24 (b) of the IT Act in respect of loan borrowed for acquisition of property. 2.2. The Learned Commissioner (Appeals) and Learned Assessing Officer have erred in disallowing interest by failing to appreciate that the entire loan of Rs. 64.50 Crores borrowed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase are that the assessee is in the business of leasing of properties and maintenance filed the Return of income electronically for the assessment year 2012-13 on 29/09/2012 with total income of Rs.98,70,230/- and the Return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and notice u/ss 143(2) and 142(1) of the Act were issued. Due to change in jurisdiction, notice was issued again and in response the learned AR appeared from time to time and produced the details. The AO, on perusal of income-tax Return found that the assessee has claimed interest on borrowing u/s 24(b) and submitted copy of the agreement dated 30/03/2009 entered between M/s. Manyata Promoters Pvt. Ltd. and M/s.Mfar Holdings Pvt. Ltd. As per agreement, an amount of Rs.31,66,28,000/- has to be paid as sale consideration and was discharged by issue of shares. Subsequently sale deed was entered for same transaction and a sum of Rs.31,66,000/- was paid by way of cheque. It was submitted that the loan taken over of Rs.44,04,52,711/- which had been availed of by M/s. Mfar Holdings from Union Bank of India was closed and another loan Rs.64.50 crores was availed form Axis Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the transaction of the assessee is in the nature of slump sale and referred to the assets and liabilities whereas the learned AR heavily contested that it is in the nature of take over of the asset along with liability and does not come under the purview of slump sale. The learned AR's contention that to discharge the liability, the assessee has taken over the loan of Rs.44,04,527/- availed by M/s. Mfar Holdings, from Union Bank of India and this loan was closed by the assessee after availing loan of Rs.64.5 crores from Axis Bank. The learned AR substantiated and reiterated his arguments that in the earlier years, the claim was made in the books of account and referred to the computation of income and copy of income-tax return (ITR) at pages 138 to 160 of the paper book and in particular at page No.147 where the details of house property was disclosed in the Schedule HP in the Income-tax Return where the assessee has disclosed interest payable on borrowed capital in this assessment year. Further, the learned AR referred to the assessment order for the assessment year 2010-11 filed at pages 161 to 163 of the paper book passed u/s 143(3) dated 30/11/2012. On further clarifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase where the property along with other assets and the liabilities had been taken over by one partner on dissolution. The dissolution deed provided for payment of certain amounts to the outgoing partners by 31-12-1976. It was further stipulated that in case the payment was not made by that date, the assessee was liable to pay interest on the amounts due to the outgoing partners. There was some delay in payment to the outgoing partners and the interest was paid to them. Since one of the assets taken over by the continuing partner was a building, the assessee claimed that he was entitled to deduction of such interest under section 24(1)(vi). This claim was negatived on the ground that there was no specific borrowing by the assessee from the outgoing partners to acquire that property and, therefore, the incurring of the liability could not be considered as capital borrowed for acquiring such building. It was further held that when all the assets and liabilities of the firm were taken over by the assessee, it could not be said that any particular asset, out of the total assets of the firm, was taken over with the aid of outstanding due to the outgoing partners. Such is not the case bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013-14 and 2014-15 are similar to assessment year 2012-13, we accordingly direct the AO to allow the claim made of deduction of interest to the assessee from the income from house property. 11. The ground of appeal in respect of processing fee and pre-payment charges to be allowed u/s 24(b), the learned AR substantiated his argument relying on the decision of the Tribunal in the case of Pentagram Properties Pvt. Ltd. vs. Dy.CIT in ITA No.3713/Mu/2010 & ITA No.4526/Mum/2010 dated 12/08/2011 and referred to paras. 4, 5 and 6 of the Tribunal order which read as under: "4. The assessee appealed to the CIT(A), who held that the processing fee of 255,00.000/- was not allowable as a deduction since it cannot be considered as interest as defined in section 2 28A) of the Act. The balance disallowance was deleted. 5. The assessee is in appeal questioning the decision of the CIT(A) regarding the allowance of processing fees. Section 24(b) allows deduction in respect of any interest payable on capital borrowed for the purpose of acquiring, constructing, repairing or renewing the property. Section 2(28A), which was inserted by the Finance Act, 1976, with effect from 1st June 1976 defines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the properties. Whether such an action of the Assessing Officer is correct has come up before the Mumbai Bench of the Tribunal in the case of ITO vs. Grandeur Properties Pvt. Ltd., in ITA No: 2056/Mum/2010. By order dated 28th January 2011 (copy filed), the Tribunal has held as under: - "8. We have noted that there is no dispute that a borrowing by way of debentures, in respect of which interest is claimed as deduction, is duly utilized for the purposes of purchase of the property. There is also no dispute that there is no specific legal provision enabling disallowance of interest in respect of excess consideration. even if that be so, paid for purchase of property. In any event. neither stamp duty valuation is a conclusive proof of value of property, nor a valuer's report, as is submitted by the assessee in support of the purchase price, can be simply brushed aside. We are unable to see any merits in the action of the Assessing Officer. The transfer pricing regulations and the provisions under section 40A(2), which have been referred to in the grounds of appeal, have no application to the facts of this case either. In our considered view, learned CIT(A) was fully justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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