TMI Blog2022 (12) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... solidated order passed by the Ld. Commissioner of Income Tax(Appeals)-43, New Delhi [hereinafter referred to as CIT(A) ] pertaining to A.Y. 2007-08 to A.Y. 2012-13. Since the issues involved in all the appeals were similar, they have been heard together and are being disposed off by this common and consolidated order for the purpose of convenience. 2. At the outset, it is noted that these appeals were initially dismissed by the Coordinate Benches vide order dated 07/09/2017 for want of prosecution and subsequently, in response to misc. application filed by the assessee, the order so passed by the Coordinate Bench was recalled vide order dated 15/01/2019 and hence, these appeals have come up for hearing before us. 3. With the consent of both the parties, the case of the Assessee in ITA No. 469/Chd/2016 in the case of Karnail Singh Vs. The Asst. DIT is taken as the lead case wherein the grounds of appeal read as under: 1. That the notice issued under section 153A and the assessment completed under section 153A are illegal, bad in law and without jurisdiction. The additions made are also illegal, bad in law, as the same are not based on any material found during the allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement between India and U.K. has been wrongly interpreted. Even on the basis of stated facts and observations made by the Ld. A.O., the income was assessable under the head Interest Income and chargeable to tax @15% accordingly. The Ld. C.I.T. (A) has wrongly upheld the income assessed by the A.O. 10. That the Lower Authorities have further grossly erred in law and on facts in not allowing the deduction of Interest paid on the capital borrowed for acquiring the Immovable Property. The interest claimed has been wrongly disallowed. In any case, the interest paid on the borrowed capital was allowable deduction from the income whether assessed as Rental Income or assessed under the head other sources. 11. That the deductions claimed by the Appellant have been wrongly disallowed. The observation made by the Ld. A.O. are against facts and are based on surmises conjectures and do not afford legal justification to the income assessed. That the explanations filed and the evidence placed on record have not been properly considered and judicially interpreted and the deductions have been wrongly disallowed. The Ld. C.I.T. (A) has wrongly upheld the same. 12. That in any case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further referring to the allotment letter, the AO held that the agreement does not intend to treat assured return as interest as nowhere in the allotment letter, it has been stated that M/s Omaxe Ltd. shall pay any interest to the assessee otherwise it would have been worded as interest which is absent in the instant case. It was accordingly held by the AO that assured return received by the assessee can only be classified under the head income from other source under section 56(1) of the Act and the same was accordingly brought to tax in the hands of the assessee and as against the returned income, the assessed income was determined at Rs 2,58,090/-. 5. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A). The submissions made before the AO were reiterated. It was submitted that the AO has failed to appreciate the nature of income received by way of assured return before allotment of the property. It was submitted that under Article-12 of the Indo-UK DTAA, the term interest means income from debt claims of every kind. It was submitted that the amount given by the assessee to M/s Omaxe Ltd. was in the nature of debt claim till the possession of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly brought to tax as per Indo-UK DTAA. 7. Per contra, the Ld. DR relied on the findings of the lower authorities. 8. We have heard the rival contentions and purused the material available on record. We find that under the identical set of facts and circumstances of the case, the matter has been decided by the Coordinate Chandigarh Benches in case of Shri Mohinder Singh Sanghera Vs. Astt. DIT (Supra) and the relevant findings of the Coordinate Bench are contained at para 9 to 13 of its order which read as under: 9. Now, coming to the merits of the case, the Assessing officer while making the impugned additions has relied upon the definition of interest as provided under article 12 of the India U.K. DTAA, which read as under:- The term interest as used in Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtors profits, and in particular, income from Government Securities and income from bonds and debentures, including premiums and prizes attaching to such securities, bonds or debentures but, subject to the provisions of paragraph 9 of this Article, shall not include a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e did not get right of lien in the proposed property. The assessee, under the circumstances, had a claim of debt against the Omaxe Ltd, which means the assessee had advanced money to the Omaxe Ltd. which was nothing but a debt claim till the proposed property is constructed, possession handed over to the assessee and the conveyance deed executed and registered. In our view, it was a financial transaction and the assured money return received by the assessee was nothing else than the interest received by the assessee on the finances made by the assessee to the Omaxe Ltd to be used for the construction of the property. Therefore, the Omaxe Ltd had rightly deducted the tax @ 15% of the interest / assured return paid to the assessee. Even the assessee on being asked to file the return has also treated the said receipts as interest income. However, subsequently, the assessee changed his stand and come with a plea that the assured return is only in the nature of capital receipt. The assessee in this respect has placed reliance on several decisions of the High Courts and Supreme Court. Without referring to each of the decision, we may point out that the decisions referred to by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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