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Income Tax Appellate Tribunal, DELHIBENCH ‘E’, NEW DELHI
Before: Dr. B. R. R. KumarSh. Yogesh Kumar US
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. CIT(A)-1, Gurgaon dated 29.08.2016.
The assessee has raised the following grounds of appeal:
“1. On the facts and circumstances of the case and in Law, the order of CIT (A) is wrong, illegal, and against the provision of sections 22, 23, 24, 25, 27 & 64 of the Income Tax Act, 1961, in respect of house property Flat No.202, Tower-17, Close South Nirvana Gurgaon, which is liable to set aside.
The Ld CIT (A) has erred in law and on facts by way of upholding AO decision of disallowing loss of Rs.8,61,682/- under the chapter income from house property in respect of property no. flat no.202 tower 17 Nirvana, Gurgaon, Ld CIT(A) has ignored the limit of deduction U/s 24b is applicable to the assessee wise and not property wise, if the assessee owns
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more than one property and property is let out or deemed to be let out then there is no maximum limit on interest on Home Loan.” 3. The assessee filed return of income on 31.07.2011 declaring an income of Rs.1,07,85,460/- which was processed u/s 143(1) of the Income Tax Act, 1961. The assessee declared income from salary, short term capital gain and other sources. The Assessing Officer submitted that the assessee claimed loss of Rs.2,84,392/- on the let out property, H. No. 5418, Ground Floor, DLF City, Phase-IV, Gurgaon. The assessee is the owner of the property along with his wife in the ratio of 50% each. The AO held that since the assessee is co-owner of the property is allowed on 50% of the loss claimed. The assessee submitted that the entire amount has been paid by the assessee for the purchase of property and also the entire rent is received and offered to tax by the assessee only. We find that the name of the wife is added only for the convenience purpose and since the amount has been paid and also rent is being offered to tax by the assessee, the loss is also allowable in the hands of the assessee. The addition made of Rs.1,42,196/- is directed to be deleted.
The assessee claimed loss of Rs.8,61,600/- on another property which was not let out during the whole year and remained vacant throughout the year. The assessee has taken position of the property in the month of October 2011. The deemed rent, rental income was Rs.3,72,000/- and the interest paid was Rs.11,22,080/- and also claimed standard deduction of Rs.11,600/-.
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The provisions of Section 23 & 24 are as under:
Section 23
“Annual value how determined.
(1) For the purposes of section 22, the annual value 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) where the property or any part of the property is let and the actual rent received or receivable by the owner in 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 let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable :
Provided that the taxes levied by any local authority 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 employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him.
Explanation.—For the purposes of clause (b) or clause (c) of this sub- section, the amount of actual rent received or receivable by the owner shall not include, subject to such rules13 as may be made in this behalf, the amount of rent which the owner cannot 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 purposes of his own residence; or
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(b) 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, the annual value of such house or part of the house shall be taken to be nil.
(3) The provisions of sub-section (2) shall not apply 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 owner.
(4) Where the property referred to in sub-section (2) consists of more than two houses—
(a) the provisions of that sub-section shall apply only in respect of two 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 or houses in respect of which the assessee has exercised an option under clause (a), shall be determined under sub-section (1) as if such house or houses had been let.
(5) Where the property consisting of any building or land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not let during the whole or any part of the previous year, the annual value of such property or part of the property, for the period up to two years from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority, shall be taken to be nil.”
Section 24
“Deductions from income from house property.
Income chargeable under the head "Income from house property" shall be computed after making the following deductions, namely:—
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(a) a sum equal to thirty per cent of the annual value;
14(b) where the property has been acquired, constructed, 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 or, as the case may be, the aggregate of the amount of deduction shall not exceed thirty thousand rupees :
Provided further that where the property referred to 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 within five years from the end of the financial year in which capital was borrowed, the amount of deduction or, as the case may be, the aggregate of the amounts of deduction under this clause shall not exceed two lakh rupees.
Explanation.—Where the property has been acquired or 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 thereof allowed as deduction under any other provision of this Act, shall be deducted under this clause in equal installments for the said previous 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 the person to whom any interest is payable on the capital borrowed, specifying 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 new 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 repayment of such capital:
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Provided also that the aggregate of the amounts of deduction under the first and second provisos shall not exceed two lakh rupees.”
On going through the provisions of Sections 23 & 24, we hold that the disallowance made by the AO of Rs.8,61,682/- is hereby directed to be deleted.
In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 03/03/2023.
Sd/- Sd/- (Yogesh Kumar US) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 03/03/2023 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR