Interest Certificate Not Necessary For Claiming Section 24(B) Deduction: ITAT

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the interest certificate is not necessary for claiming section 24(b) deduction.

The bench of Aby T. Varkey (Judicial Member) and S. Rifaur Rahman (Accountant Member) has observed that PCIT erred in holding that the Assessee was ineligible for interest deduction as it did not furnish the certificates from the lender banks as per Section 24(b)-third proviso.

The appellant/assessee is in the business of Commercial leasing which includes IT Park and IT/ITES SEZ, Construction of Residential Flats and Sales, and Hospitality Business.

The assessing officer passed the Assessment Order accepting the return of income filed by the assessee.

The Pr. CIT while examining the records, observed that assessment order d passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, and requires revision. The PCIT issued show cause notice to the assessee and recorded the reasons for the revision.

In the reasons recorded Pr.CIT mentioned that the assessee has claimed deduction under section 24(b) and the assessee has not furnished documentary evidence in support of its claim during the assessment proceedings. On perusal of notices issued under section 142(1), the Assessing Officer has not raised any query on deduction claimed under section 24(b) in its return of income.

The Pr. CIT observed that the assessee has not submitted the Interest Certificate from the Bank during the course of assessment proceedings nor during the proceedings under section 263. The onus lies on the assessee to substantiate any claim made in the return of income with substantiating documents.

The tribunal held that the assessee has submitted all the relevant information, the basis of allocation before the Assessing Officer.

“Even otherwise if we consider that the Assessing Officer has not verified the claim made by the assessee it can be considered an erroneous order. However, in order to invoke provisions of section 263 of the Act, both conditions have to be satisfied, not just erroneous, even if the condition, is prejudicial to the revenue. But as per the discussion in the above paragraph, we do not agree with the Pr.CIT that the condition of prejudice to the interest of the Revenue is satisfied,” the ITAT said.

Case Title: Manjri Stud Farm Pvt. Ltd. Versus ACTI

Case No.: ITA NO. 1106/MUM/2022

Date: 09.08.2023

Counsel For Appellant: Ketan Ved

Counsel For Respondent: Riddhi Mishra

Click Here To Read The Order