Vaidya Narayanan Sundaram, Bangalore V. ITO, Bangalore

ITA 995/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8468 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - A BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 995/BANG/2016 ASSESSMENT YEAR : 2010-11 SHRI VAIDYA NARAYANAN SUNDARAM, E-2, KRISTAL CAMPUS, 10, SARJAPURA MAIN ROAD, YAMERE VILLAGE, BANGALORE 562 125. PAN: BALPS 8680L VS. THE INCOME TAX OFFICER, 5(3)(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI P. BALAKRISHNAN, CA RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT (DR) DATE OF HEARING : 27.02.2017 DATE OF PRONOUNCEMENT : 24.03.2017 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED: 08.03.2016 OF CIT(A) FOR THE ASSESSMENT YEAR 2010-11. THE ASS ESSEE HAS RAISED THE FOLLOWING GROUNDS. ITA NO. 995/BANG/2016 PAGE 2 OF 6 2. THE ASSESSEE AND HIS WIFE ARE OWNERS OF PROPERTY AN D AVAILED A LOAN JOINTLY TO ACQUIRE THE SAID PROPERTY. A SUM OF RS. 5,66,259/- WAS PAID TOWARDS INTEREST ON THE LOAN FOR ACQUIRING THE SAID PROPERTY AND THE SAME WAS CONTRIBUTED BY BOTH THE ASSESSEE AS WELL AS HIS WIFE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE AND HIS WIFE BOTH CLAIMED DEDUCTION OF INTEREST OF RS. 1,50 ,000/- ON LOAN FOR THIS HOUSE PROPERTY SHOWN AS SELF OCCUPIED PROPERTY IN T HEIR RETURNS. THE AO OBSERVED THAT THE OVERALL CEILING U/S. 24(B) IN RES PECT OF SELF OCCUPIED PROPERTY WAS RS. 1,50,000/-. ACCORDINGLY, THE AO R ESTRICTED THE CLAIM OF INTEREST DEDUCTION AT RS. 75,000/- IN CASE OF THE A SSESSEE AND ADDED THE REMAINING AMOUNT OF RS. 75,000/- TO THE INCOME RETU RN. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) B UT COULD NOT SUCCEED. 3. BEFORE THE TRIBUNAL, THE LD. AR OF THE ASSESSEE HAS REFERRED TO SECTION 26 OF THE IT ACT AND SUBMITTED THAT IN CASE THE PROPER TY IS OWNED BY TWO OR MORE PERSONS AND THEIR SHARES ARE DEFINITE AND ASCE RTAINABLE, THE SHARE OF EACH PERSON IN THE INCOME FROM PROPERTY IS TO BE IN CLUDED IN THE TOTAL INCOME AND AS PER THE EXPLANATION TO SECTION 26 WHE THER A PROPERTY IS USED BY CO-OWNERS FOR SELF RESIDENCE, EACH SUCH CO-OWNER WILL BE INDIVIDUALLY ENTITLED TO THE CONCESSIONAL TAX TREATMENT UNDER SU B SECTION 2 OF SECTION 23. PLACING RELIANCE ON THIS PROVISION THE LD. AR HAS SUBMITTED THAT EACH ITA NO. 995/BANG/2016 PAGE 3 OF 6 OF THE CO-OWNER IS ENTITLED TO THE FULL BENEFIT OF INTEREST DEDUCTION U/S. 24(B) OF THE ACT. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF CI T VS BIJOY KUMAR ALMAL (215 ITR 22) . 4. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT TH E DECISION RELIED UPON BY THE LD. AR IS REGARDING THE COMPUTATION OF ANNUA L VALUE AND DEDUCTION U/S. 23(2) AND NOT REGARDING THE DEDUCTION U/S. 24( B). HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE PROPERTY IN QUESTION IS OWNED BY THE A SSESSEE AND HIS WIFE IN THE JOINT NAME AND THEY HAVE PAID THE INTEREST OF R S. 5,66,259/- IN RESPECT OF THE LOAN JOINTLY AVAILED TO ACQUIRE THE PROPERTY . THE QUESTION ARISES IN THIS APPEAL OF THE ASSESSEE IS THE CLAIM OF THE DED UCTION U/S. 24(B) ON ACCOUNT OF INTEREST ON THE LOAN FOR ACQUISITION OF THE PROPERTY IS ALLOWABLE TO THE FULL AMOUNT OF RS. 1,50,000/- TO EACH CO-OWN ER ON THE TOTAL DEDUCTION UNDER THIS SECTION SHALL NOT EXCEED RS. 1 ,50,000/- IRRESPECTIVE OF NUMBER OF OWNERS. THE LD. AR OF THE ASSESSEE HAS R EFERRED TO SECTION 26 OF THE ACT WHICH READS AS UNDER. ITA NO. 995/BANG/2016 PAGE 4 OF 6 6. THUS, AS PER THE PROVISIONS U/S. 26 THE SHARE OF EA CH OF THE CO-OWNER IN THE INCOME FROM HOUSE PROPERTY HAS TO BE COMPUTED IN AC CORDANCE WITH THE PROVISIONS OF SECTION 22 TO 25 AND FURTHER AS PER E XPLANATION TO THIS SECTION, IF THE HOUSE PROPERTY IS IN OCCUPATION OF THE OWNERS, THEN THE BENEFIT OF SECTION 23(2) IS AVAILABLE TO EACH OF THE CO-OWNER INDIVIDU ALLY. THEREFORE, THE PROVISIONS OF SECTION 26 PROVIDES BENEFIT OF SECTIO N 23(2) TO EACH OF THE CO- OWNER INDIVIDUALLY. FURTHER THE PLAIN READING OF S ECTION 24(B) AS WELL AS SECOND PROVISO MAKES IT CLEAR THAT THE DEDUCTION ON ACCOUNT OF INTEREST IS ALLOWABLE WHILE COMPUTING THE INCOME AS PER THE PRO VISIONS OF SECTION 22 TO 25 OF THE ACT. IT IS PERTINENT TO NOTE THAT IN CAS E, THE SHARE OF INTEREST PAYMENT OF EACH CO-OWNER IS MORE THAN RS. 1,50,000/- EACH T HEN THE LIMITATION PROVIDED U/S. 24(B) CAN BE APPLIED FOR EACH INDIVID UAL CO-OWNER OF THE PROPERTY. THIS ISSUE CAN BE LOOKED INTO FROM ANOTH ER ANGLE WHERE THE CO- OWNERS INSTEAD OF PURCHASING A PROPERTY IN JOINT NA ME, PURCHASES SEPARATE PROPERTIES IN THEIR INDIVIDUAL NAME FROM THE SAME L OAN CAPITAL THEN EACH OF ITA NO. 995/BANG/2016 PAGE 5 OF 6 THE CO-OWNER WOULD BE ELIGIBLE FOR DEDUCTION U/S. 2 4(B) TO THE EXTENT OF RS. 1,50,000/-. THEREFORE WHEN THE ASSESSMENT OF THE S HARE OF EACH CO-OWNER HAS TO BE COMPUTED SEPARATELY IN ACCORDANCE WITH THE PR OVISIONS OF SECTION 22 TO 25, THEN THE EACH INDIVIDUAL IS ENTITLED FOR FULL B ENEFIT OF SECTION 24(B) OF THE ACT PROVIDED THE ACTUAL INTEREST LIABILITY OF EACH CO-OWNER IS NOT LESS THAN RS. 1,50,000/-. ACCORDINGLY, IT IS NOTED THAT THE CIT(A) HAS NOT APPRECIATED THE DECISION OF HONBLE BOMBAY HIGH COURT IN CASE O F CIT VS ABDULLABHAI M. MOONIM (132 ITR 642) IN ITS CORRECT PERSPECTIVE WHEREIN THE ISSUE OF ALLOWING THE DEDUCTION U/S. 24 ON ACCOUNT OF INTERE ST ON THE LOAN TAKEN BY THE JOINT OWNERS AND FURTHER BY INDIVIDUAL OWNER CLAIME D THE INTEREST ON THE LOAN APART FROM THE LOAN JOINTLY TAKEN. THE HONBLE HIG H COURT HAS ALLOWED THE CLAIM OF THE INDIVIDUAL CO-OWNER ON ACCOUNT OF INTE REST ON LOAN WHICH WAS TAKEN APART FROM THE COLLECTIVE LOAN TAKEN BY THE J OINT OWNERS FROM THE BANK. HENCE THE ORDERS OF THE AUTHORITIES BELOW QUA THIS ISSUE ARE SET ASIDE AND CLAIM OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF MARCH, 2017 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DATED, THE 24 TH MARCH, 2017. / MS/ ITA NO. 995/BANG/2016 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.