Smt. Vandana Bharrgava, Lucknow V. Asstt. Commissioner of Income Tax, Lucknow

ITA 580/LKW/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83263 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 19-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTA VA
• Assessee Lawyers: J J MEHROTRA
• Keywords: Deemed owner of house property; Opportunity of being heard

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.580/LKW/2013 ASSESSMENT YEAR:2009 - 10 SMT. VANDANA BHARRGAVA, B - 48, J PARK, MAHANAGAR EXT. LUCKNOW. PAN:AIHPB8701C VS. A.C.I.T., RANGE - 3, LUCKNOW. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI J. J. MEHROTRA, C.A. RESPONDENT BY SHRI Y. P. SRIVASTAVA, D. R. DATE OF HEARING 09/07/2014 DATE OF PRONOUNCEMENT 2 1 /08/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, LUCKNOW DATED 10/04/2013 FOR THE ASSESSMENT YEAR 200 9 - 10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF ADDING A SUM OF RS.8,239/ - UNDER THE HEAD ''INCOME FROM HOUSE PROPERTY' BY WAY OF RESTRICTING THE CLAIM OF INTEREST RS.1,50,000/ - MADE BY THE A PPELLANT. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE 2 ACTION OF THE ASSESSING OFFICER OF REJECTING THE CLAIM OF THE APPELLANT THAT INCOME UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY ' IN RESPECT OF ALIGANJ PROPERTY SHOULD HAVE BEEN WORKED OUT AFTER ALLOWING DEDUCTION OF LOSS OF RS.2,43,949/ - REPRESENTING INTEREST PAID ON LOAN IN RESPECT THERETO. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSING OFFICER HAS ACTED CORRECTLY IN ACCORDANCE WITH THE DIRECTIONS ISSUED UNDER SECTION 144A OF THE INCOME TAX ACT AND REJECTING THE PLEA OF THE APPELLANT THAT THE ORDER PASSED WAS IN UTTER DISREGARD OF THE SAME. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE LAW THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN REJECTING THE CLAIM OF THE APPELLANT OF LOSS WORKED OUT UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' AND CONFIRMING TH E ACTION OF THE ASSESSING OFFICER IN THIS RESPECT. 5. THAT THE ORDER PASSED BY THE LD. CIT(A) IS WITHOUT PROPER OPPORTUNITY AND BAD IN LAW. 6. THAT THE ORDER PASSED BY THE LD. CIT(A) IS AGAINST THE MERITS, CIRCUMSTANCES AND LEGAL ASPECTS OF THE CASE. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, OR WITHDRAW ANY OR ALL THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT ON PAGE NO. 10 OF HIS ORDER, IT IS NOTED BY CIT(A) THAT THE ONLY DISPUTE IS REGARDING CLAIM OF DEDUCTION ON ACCOUNT OF INTEREST PAYABLE ON BORROWED CAPITAL. HE HAS ALSO NOTED THAT THE ASSESSEE HAS CLAI MED INTEREST OF RS.1.50 LAC IN RESPECT OF MAHANAGAR PROPERTY AND RS.2,52,188/ - IN RESPECT OF ALIGANJ PROPERTY WHEREAS THE ASSESSING OFFICER HAS ALLOWED INTEREST ON BORROWED CAPITAL TO THE EXTENT OF RS.1.50 LAC ONLY. HE HAS REFERRED TO SECOND PROVISO 3 TO SE CTION 24 WHEREIN IT IS PRESCRIBED THAT IN RESPECT OF PROPERTY REFERRED TO IN SUB SECTION (2) OF SECTION 23, THE AMOUNT OF DEDUCTION SHALL NOT EXCEED RS.1 .50 LAC. IT WAS THE SUBMISSION OF THE ASSESSEE BEFORE THE CIT(A) THAT THIS LIMIT OF RS. 1 .50 LAC SHALL APPLY IN RESPECT OF ONE PROPERLY ONLY. THEREAFTER HE HAS POINTED OUT THAT OUT OF THESE TWO PROPERTIES FOR WHICH LOANS WERE BORROWED AND INTEREST WAS PAID, NO PROPERTY WAS L ET OUT B UT ONLY ONE PROPERTY WAS CONSIDERED AS SELF OCCUPIED AND OTHER PROPERTY WAS CONSIDERED AS DEEMED TO BE LET OUT. HE ALSO POINTED OUT THAT DEEMED LET OUT VALUE OF RS.2,11,888/ - WAS ASSESSED TO TAX AND THEREFORE, DEDUCTION ON ACCOUNT OF INTEREST PAYMENT FOR THIS PROPERTY SHOULD BE ALLOWED IN FULL IN ADDITION TO DEDUCTION ON ACCOUNT OF INTEREST FOR ELF OCCUPIED PROPERTY TO THE EXTENT OF RS.1.50 LAC. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT SUB SECTION (2) OF SECTION 23 REFERS TO A HOUSE OR PART OF A HOUSE WHICH IS IN THE OCCUPATION OF THE OWNER FOR THE PURPOSES OF HIS OWN RESIDENCE OR CANNOT ACTUALLY BE OCCUPIED BY THE OWNER BY REASON OF THE FACT THAT OWING TO HIS EMPLOYMENT, BUSINESS OR PROFESSION CARRIED ON AT ANY OTHER PLACE, HE HAS TO RESIDE AT THAT OTHER PLACE IN A BUILDING NOT BELONGING TO HIM AND THE ANNUAL VALUE OF SUCH HOUSE OR PART OF THE HOUSE SHALL BE TAKEN TO BE NIL. IN THE PRESENT CASE, THE ANNUAL VALUE OF ONE HOUSE WAS TAKEN NIL AND SECOND WAS ASSESSED TO TAX. HENCE, IT HAS TO BE ACCEPTED THAT THE PROVISION OF SUB SECTION (2) OF SECTION 23 IS A PPLICA BLE IN RESPECT OF ONE HOUSE ONLY FOR WHICH ANNUAL VALUE WAS TAKEN AT NIL . AS PER THE PROVISION OF SECTION 24B OF THE ACT, WHERE THE PROPERTY HAS BEEN ACQUIRED WITH BORROWED CAPITAL, TH E AMOUNT OF ANY INTEREST PAYABLE ON SUCH CAPITAL IS ALLOWABLE AS DEDUCTION SUBJECT TO THE PROVISO THAT IN RESPECT OF PROPERTY REFERRED TO IN SUB SECTION (2) OF SECTION 23, THE AMOUNT OF DEDUCTION SHALL 4 NOT EXCEED RS.1.50 LAC. HENCE, IN THE PRESENT CASE, THE ASSESSEE HAS TO BE ALLOWED DEDUCTION OF ACTUAL INTEREST EXPENDITURE SUBJECT TO THE CEILING OF RS.1.50 LAC ON ACCOUNT OF INTEREST EXPENDITURE IN RESPECT OF THE PROPERTY WHICH WAS CONSIDERED TO BE SELF OCCUPIED AND FOR WHICH THE ANNUAL VALUE WAS CONSIDERED AT NIL. THE INTEREST EXPENDITURE IN RESPECT OF SECOND PROPERTY FOR WHICH THE ANNUAL VALUE HAS BEEN BROUGHT TO TAX , INTEREST EXPENDITURE IS ALLOWABLE IN FULL WITHOUT ANY CEILING . FROM THE ASSESSMENT O RDER OR FROM THE ORDER OF CIT(A), IT IS NOT COMING OUT AS TO HOW MUCH INTEREST IS PAYABLE IN RESPECT OF MAHANAGAR PROPERTY WHICH WAS ACCEPTED AS SELF OCCUPIED AND HOW MUCH INTEREST IS PAYABLE IN RESPECT OF ALIGANJ PROPERTY WHICH WAS CONSIDERED AS D EEMED TO BE LET OUT AND ANNUAL VALUE WAS BROUGHT TO TAX. UNDER THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THIS ISSUE SHOULD GO TO THE ASSESSING OFFICER FOR FRESH DECISION. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO THE FILE O F THE ASSESSING OFFICER FOR FRESH DECISION. THE ASSESSEE HAS TO BRING THE DETAILS AND EVIDENCE ON RECORD AS TO HOW MUCH LOAN WAS BORROWED IN RESPECT OF MAHANAGAR PROPERTY AND HOW MUCH INTEREST WAS PAID ON SUCH LOAN IN THE PRESENT YEAR . DEDUCTION ON ACCOU NT OF SUCH INTEREST EXPENDITURE SHOULD BE ALLOWED TO THE ASSESSEE SUBJECT TO UPPER LIMIT OF RS.1.50 LAC. SINCE THE ANNUAL VALUE OF THAT PROPERTY IS TAKEN AT NIL, THE ALLOWING OF INTEREST EXPENDITURE, WILL RESULT INTO LOSS TO THE EXTENT OF SUCH ALLOWABLE I NTEREST UNDER THE HEAD INCOME FROM HOUSE PROPERTY ON ACCOUNT OF THIS PROPERTY. IN RESPECT OF ALIGANJ PROPERTY, WHATEVER INTEREST HAS BEEN INCURRED SHOULD BE REDUCED FROM THE INCOME ASSESSED BY THE ASSESSING OFFICER IN RESPECT OF ALIGANJ PROPERTY. THE TOT AL OF SUCH INCOME AFTER INTEREST EXPENDITURE OF ALIGANJ PROPERTY AS WELL AS MAHANAGAR PROPERTY SHOULD BE TOTAL INCOME OR LOSS UNDER THE HEAD HOUSE PROPERTY WHICH SHOULD BE CONSIDERED FOR THE PURPOSE OF COMPUTING TOTAL INCOME OF 5 THE ASSESSEE. NEEDLESS TO S AY, THE ASSESSING OFFICER SHOULD ALLOW REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIO N PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 1 /08/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR