Neeraj Nath Vs ITO (ITAT Mumbai)
ITAT Mumbai Allows Interest Netting – Loan to Spouse Treated as Genuine, Not Housing Loan
Assessee filed appeal against NFAC’s order dated 21.09.2023 arising out of assessment u/s 143(3). The appeal reached Tribunal with delay of 459 days, for which Assessee sought condonation. He submitted affidavit stating that he suffered a grievous fall in Sept 2023, was bedridden, & his staff inadvertently failed to deliver papers to CA. Believing matter was being pursued, he later discovered lapse upon receipt of penalty notice. Tribunal accepted the explanation, held delay neither deliberate nor mala fide, & condoned it in the interest of justice.
On merits, two issues were examined.
(1) Disallowance of interest ₹7,68,942/- u/s 57:
AO disallowed interest paid to ICICI Bank on “home loan”, holding no nexus with interest income. CIT(A) confirmed. Before Tribunal, Assessee explained that ₹79.5 lakh loan was mortgage loan secured against land, not for house purchase, & was advanced to wife on which 12% interest was charged (taxed), while paying 10.75% to ICICI. In earlier year AY 2009-10, Tribunal had accepted identical claim in assessee’s case, applying principle of “substance over form.” Following the precedent, ITAT deleted disallowance & allowed netting of interest.
(2) Addition of ₹60,00,000/- on alleged non-agricultural land sale:
AO taxed amount u/s 68 treating it unexplained, as no sale deed was filed initially. During appeal, assessee produced sale deed & Tehsildar’s certificate showing land was agricultural. AO in remand accepted genuineness of agreement but opined land was non-cultivable, leading CIT(A) to confirm addition as capital gains on non-agricultural land. Tribunal observed that official records indicated agricultural classification & held matter required fresh examination. It remanded issue back to AO to verify evidences; if land is certified agricultural, no tax can be levied.
Accordingly, appeal was partly allowed – interest disallowance deleted, land sale issue remanded for fresh adjudication.
