RAJESH CHACKO MATHEW, MUMBAI V. ACIT 17(2), MUMBAI

ITA 2758/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79544 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A R SODHA
• Section: 234B

Judgement Text

D IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI B R BASKARAN, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO. : 2758/MUM/2013 (ASSESSMENT YEAR: 2008-09) SHRI RAJESH CHACKO MATHEW, 45A, 4 TH FLOOR, TODI ESTATE, SUNIL MILL COMPOUND, LOWER PAREL, MUMBAI -400 013 .: PAN: AGPPM 2853 E VS ACIT 17(2), 4 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI -400 012 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.R. SODHA RESPONDENT BY : SHRI DURGA DUTT !'#$% /DATE OF HEARING : 15-07-2014 &'( #$%/ DATE OF PRONOUNCEMENT : 31-07-2014 * + * + * + * + O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF CIT(A) 16, MUMBAI, DATED 04.01.2013 FOR AY 2008-09. 2. THE ISSUE INVOLVED IN THE PRESENT APPEAL RELATES TO THE CONFIRMATION OF DISALLOWANCE OF INTEREST ON LOAN OF RS. 3,30,567/- UNDER SECTION 24(B) AND CONSEQUENTIAL INTEREST CHAR GED THEREON AT RS. 65,453/- UNDER SECTION 234B BY THE AO. 3. THE FACTS OF THE CASE, IN BRIEF, ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT, THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 24(B) IN RESPECT TO DEEM ED LET OUT PROPERTY AT SANTACRUZ AMOUNTING TO RS. 4,80,757/-. ASSESSING OFFICER WAS OF SHRI RAJESH CHACKO MATHEW ITA NO. 2758/MUM/2013 2 THE OPINION THAT CLAIM OF INTEREST AS AFORESAID SHO ULD BE RESTRICTED TO RS. 1,50,000/- UNDER THE PROVISOS TO SECTION 24(B). THAT SECTION 23(4) IS AN EXTENSION OF THE SECTION 23(2). HENCE CLAIM O F DEDUCTION IN BOTH THE CASES U/S. 24(B) WAS RESTRICTED TO BE RS. 1,50, 000/- UNDER THE PROVISOS OF SECTION 24(B). HENCE THE REMAINING CLAI M OF DEDUCTION AMOUNTING TO RS. 3,30,757/- WAS ADDED BY THE AO TO THE INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPE RTY. 3.1 THE LD. CIT(A) ALSO OBSERVED THAT THE RESTRICTI ON OF DEDUCTION U/S 24(B) APPLIES TO PROPERTY MENTIONED AT SUB-SECTION (2) OF SECTION 23 WHICH SPEAKS OF ANY PROPERTY/PROPERTIES WHICH IS/AR E IN OCCUPATION OF THE OWNER. SECTION 24(B) REFERS TO PROPERTY MENTION ED IN SECTION 23(2), AND NOT TO SECTION 23(4), WHICH RESTRICTS THE ALV A T NIL TO ONLY ONE SELF OCCUPIED PROPERTY. HE THEREFORE HELD THAT THE ASSES SING OFFICER'S ACTION IN RESTRICTING INTEREST ON BORROWED FUNDS TO RS. 1, 50,000/- WAS CORRECT AND THEREFORE CONFIRMED THE ADDITIONS. THE ASSESSEE IS THUS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES A ND HAVE GONE THROUGH THE ORDERS OF REVENUE AUTHORITIES AND RELEV ANT SECTIONS 23 & 24 OF THE INCOME-TAX ACT, HERE, WE DEEM IT NECESSAR Y TO REPRODUCE THE SAME, WHICH READ AS UNDER: SECTION 23 : (1) FOR THE PURPOSES OF SECTION 22, THE ANNUAL VAL UE OF ANY PROPERTY SHALL BE DEEMED TO BE (A) THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR; OR (B) (B) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND THE ACTUAL RENT RECEIVED OR RECEIVABLE73 BY THE OWNER I N RESPECT THEREOF IS IN EXCESS OF THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE; OR (C) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS L ET AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR A ND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY T HE OWNER IN SHRI RAJESH CHACKO MATHEW ITA NO. 2758/MUM/2013 3 RESPECT THEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A), THE AMOUNT SO RECEIVED OR RECEIVABLE PROVIDED THAT THE TAXES LEVIED74 BY ANY LOCAL AUTHO RITY IN RESPECT OF THE PROPERTY SHALL BE DEDUCTED (IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH TAXES WAS INCURRED BY THE OWNER ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMP LOYED BY HIM) IN DETERMINING THE ANNUAL VALUE OF THE PROPERTY OF THA T PREVIOUS YEAR IN WHICH SUCH TAXES ARE ACTUALLY PAID BY HIM. EXPLANATION.FOR THE PURPOSES OF CLAUSE (B) OR CLAU SE (C) OF THIS SUB- SECTION, THE AMOUNT OF ACTUAL RENT RECEIVED OR RECE IVABLE BY THE OWNER SHALL NOT INCLUDE, SUBJECT TO SUCH RULES75 AS MAY BE MADE IN THIS BEHALF, THE AMOUNT OF RENT WHICH THE OWNER CAN NOT REALISE. (2) WHERE THE PROPERTY CONSISTS OF A HOUSE OR PART OF A HOUSE WHICH (A) IS IN THE OCCUPATION OF THE OWNER FOR THE PURPO SES OF HIS OWN RESIDENCE; OR (B) CANNOT ACTUALLY BE OCCUPIED BY THE OWNER BY REA SON OF THE FACT THAT OWING TO HIS EMPLOYMENT, BUSINESS OR PROFESSIO N CARRIED ON AT ANY OTHER PLACE, HE HAS TO RESIDE AT THAT OTHER PLA CE IN A BUILDING NOT BELONGING TO HIM, THE ANNUAL VALUE OF SUCH HOUS E OR PART OF THE HOUSE SHALL BE TAKEN TO BE NIL. (3) THE PROVISIONS OF SUB-SECTION (2) SHALL NOT APP LY IF (A) THE HOUSE OR PART OF THE HOUSE IS ACTUALLY LET DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR; OR (B) ANY OTHER BENEFIT THEREFROM IS DERIVED BY THE O WNER. (4) WHERE THE PROPERTY REFERRED TO IN SUB-SECTION ( 2) CONSISTS OF MORE THAN ONE HOUSE (A) THE PROVISIONS OF THAT SUB-SECTION SHALL APPLY ONLY IN RESPECT OF ONE OF SUCH HOUSES, WHICH THE ASSESSEE MAY, AT HIS OPTION, SPECIFY IN THIS BEHALF; (B) THE ANNUAL VALUE OF THE HOUSE OR HOUSES, OTHER THAN THE HOUSE IN RESPECT OF WHICH THE ASSESSEE HAS EXERCISED AN OPTI ON UNDER CLAUSE (A), SHALL BE DETERMINED UNDER SUB-SECTION (1) AS I F SUCH HOUSE OR HOUSES HAD BEEN LET.] SECTION 24 : INCOME CHARGEABLE UNDER THE HEAD 'INCOME FROM HOUS E PROPERTY' SHALL BE COMPUTED AFTER MAKING THE FOLLOWING DEDUCTIONS, NAM ELY: SHRI RAJESH CHACKO MATHEW ITA NO. 2758/MUM/2013 4 (A) A SUM EQUAL TO THIRTY PER CENT OF THE ANNUAL VA LUE; (B) WHERE THE PROPERTY HAS BEEN ACQUIRED, CONSTRUCT ED, REPAIRED, RENEWED OR RECONSTRUCTED WITH BORROWED CAPITAL, THE AMOUNT OF ANY INTEREST PAYABLE ON SUCH CAPITAL: PROVIDED THAT IN RESPECT OF PROPERTY REFERRED TO IN SUB-SECTION (2) OF SECTION 23, THE AMOUNT OF DEDUCTION SHALL NOT EXCEED THIRTY THOUSAND RUPEES : PROVIDED FURTHER THAT WHERE THE PROPERTY REFERRED T O IN THE FIRST PROVISO IS ACQUIRED OR CONSTRUCTED WITH CAPITAL BORROWED ON OR AFTER THE 1ST DAY OF APRIL, 1999 AND SUCH ACQUISITION OR CONSTRUCTION IS COMPLETED 77[WITHIN THREE YEARS FROM THE END OF THE FINANCIAL YEAR IN W HICH CAPITAL WAS BORROWED], THE AMOUNT OF DEDUCTION UNDER THIS CLAUS E SHALL NOT EXCEED ONE LAKH FIFTY THOUSAND RUPEES. EXPLANATION.WHERE THE PROPERTY HAS BEEN ACQUIRED O R CONSTRUCTED WITH BORROWED CAPITAL, THE INTEREST, IF ANY, PAYABLE ON SUCH CAPITAL BORROWED FOR THE PERIOD PRIOR TO THE PREVIOUS YEAR IN WHICH THE PROPERTY HAS BEEN ACQUIRED OR CONSTRUCTED, AS REDUCED BY ANY PART THE REOF ALLOWED AS DEDUCTION UNDER ANY OTHER PROVISION OF THIS ACT, SHA LL BE DEDUCTED UNDER THIS CLAUSE IN EQUAL INSTALMENTS FOR THE SAID PREVI OUS YEAR AND FOR EACH OF THE FOUR IMMEDIATELY SUCCEEDING PREVIOUS YEARS:] PROVIDED ALSO THAT NO DEDUCTION SHALL BE MADE UNDER THE SECOND PROVISO UNLESS THE ASSESSEE FURNISHES A CERTIFICATE, FROM T HE PERSON TO WHOM ANY INTEREST IS PAYABLE ON THE CAPITAL BORROWED, SPECIF YING THE AMOUNT OF INTEREST PAYABLE BY THE ASSESSEE FOR THE PURPOSE OF SUCH ACQUISITION OR CONSTRUCTION OF THE PROPERTY, OR, CONVERSION OF THE WHOLE OR ANY PART OF THE CAPITAL BORROWED WHICH REMAINS TO BE REPAID AS A NE W LOAN. EXPLANATION.FOR THE PURPOSES OF THIS PROVISO, THE EXPRESSION 'NEW LOAN' MEANS THE WHOLE OR ANY PART OF A LOAN TAKEN BY THE ASSESSEE SUBSEQUENT TO THE CAPITAL BORROWED, FOR THE PURPOSE OF REPAYME NT OF SUCH CAPITAL . 5. A CAREFUL READING OF THE ABOVE SECTIONS REVEAL THAT AS PER SECTION 23(4) OF THE INCOME-TAX ACT, 1961 ONLY ONE PROPERTY CAN B E TREATED AS SELF OCCUPIED PROPERTY. ANY OTHER PROPERTY WILL BE AS DE EMED TO BE LET OUT THEREFORE PROVISION OF SECTION 23(1) OF THE INCOME- TAX ACT 1961 SHALL APPLY AND NOT THE PROVISION OF SECTION 23(2) OF THE ACT. SECTION 24(B) DEALS WITH DEDUCTION OF INTEREST FROM INCOME FROM HOUSE PROPER TY INCURRED ON THE BORROWED CAPITAL WITH WHICH THE PROPERTY HAS BEEN A CQUIRED, CONSTRUCTED, SHRI RAJESH CHACKO MATHEW ITA NO. 2758/MUM/2013 5 REPAIRED, RENEWED OR RECONSTRUCTED. THE PROVISO TO SECTION 24(2) RESTRICTS THE DEDUCTION FROM SELF OCCUPIED PROPERTY TO RS. 1,50,0 00/-. WHEREAS THERE IS NO SUCH RESTRICTION ON HOUSE PROPERTY OTHER THAN ONE W HICH IS SELF OCCUPIED. ACCORDINGLY, THE INTEREST WITH RESPECT TO PROPERTY GOVERNED BY SECTION 23(2) IS RESTRICTED TO RS. 1,50,000/ AND THE OTHER PROPERTY U/S 23(1) IS ENTITLED FOR ACTUAL INTEREST DEDUCTION WITHOUT THE LIMIT OF RS. 1,50,000/-. SINCE SUCH OTHER SELF OCCUPIED PROPERTY WILL BE AS DEEMED TO B E LET OUT, AS NOTED ABOVE, THEREFORE THE RESTRICTIONS OF THE PROVISO TO SECTIO N 24(2) WILL NOT APPLY. THE ASSESSEE, IN THIS CASE, HAD TWO SELF-OCCUPIED P ROPERTIES AT MUMBAI, I.E. NERUL AND SANTACRUZ. IN THE RETURN OF INCOME THE AS SESSEE TREATED THE FLAT AT NERUL AS SELF OCCUPIED WHILE THE OTHER PROPERTY AT SANTACRUZ AS DEEMED TO BE LET-OUT AS PER THE PROVISIONS OF SECTION 23(4) O F THE INCOME-TAX ACT, 1961AND ACCORDINGLY CLAIMED DEDUCTION OF 4,80,757/- IN RESPECT OF INTEREST ON BORROWED FUNDS FOR SANTACRUZ FLAT WHICH DEEMED T O BE LET OUT PROPERTY FOR WHICH THERE IS NO RESTRICTION AS DISCUSSED ABOVE. OUR ABOVE VIEW ALSO FINDS SUPPORT FROM THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M.B.AGARWAL 37 ITD 60. IN VIEW OF OUR ABOVE OBSERVATIONS, THE APPEAL OF TH E ASSESSEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2014. SD/- SD/- (B R BASKARAN) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 31 ST JULY, 2014 $/ COPY TO:- 1) / THE APPELLANT. SHRI RAJESH CHACKO MATHEW ITA NO. 2758/MUM/2013 6 2) / THE RESPONDENT. 3) THE CIT (A)-16, MUMBAI. 4) , 17 , MUMBAI / THE CIT-17, MUMBAI. 5) -'./$! D , THE D.R. D BENCH, MUMBAI. 6) /012 COPY TO GUARD FILE. *+! / BY ORDER / / TRUE COPY / / [ 3/45 , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *784! '.!. * CHAVAN, SR. PS