Mukul Rohatgi Vs ACIT (ITAT Delhi Bench)
Background: The assessee, Mr. Mukul Rohatgi, filed his return of income for AY 2020-21 declaring total income of ₹132.63 crore. The return was selected for scrutiny, & the AO completed assessment u/s 143(3) on 28.09.2022.
During the year, the assessee acquired a commercial property at Noida from M/s Tech Info Private Limited for ₹58,30,47,960. The property was let out to Kotak Mahindra Bank at a monthly rent of approximately ₹47.39 lakh.
For acquiring the property, the assessee obtained overdraft facilities totalling ₹60.50 crore from Standard Chartered Bank through two loan accounts of ₹30 crore & ₹30.50 crore.
In connection with these facilities, the assessee paid interest as well as protection insurance, processing fees & annual maintenance charges. He claimed an aggregate deduction of ₹1,17,03,182 u/s 24(b) while computing income from the let-out property.
AO Allows Interest but Rejects Interest-Related Charges
The total amount debited by the Bank under various heads was ₹1,19,47,827. It consisted of interest of ₹72,25,774, protection insurance of ₹29,40,253, processing fees of ₹14,27,800 & annual maintenance charges of ₹3,54,000.
Out of these amounts, the assessee claimed ₹1,17,03,182 as deductible u/s 24(b).
The AO adopted a narrow interpretation of the expression “interest.” He allowed only the amount of ₹72,25,774 specifically described by the Bank as interest. The balance claim of ₹44,77,708, relating to processing fees & other loan-linked charges, was disallowed.
