SAMEER KISHORE KOTICHA,MUMBAI vs. DY.COMM OF INCOME TAX 6(1) (2) , MUMBAI

On the facts and in the circumstances of the case and in law, the Honorable Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre, Delhi [the CIT (A)") has erred in confirming the adjustments made in the Order u/s 14301) of the Income Tax Act, 1961 (the Act) by treating the commercial premises of the Appellant being Unit 3C, Cynergy. Prabhadevi, Mumbai 400 028 (said premises') as self-occupied property as per Section 23(2) of the Act. 2. In doing so, the learned CIT(A) has erred in concluding that since the Appellant does not have any self- occupied property in the captioned year, the said premises is to be treated as self-occupied; ignoring the claim of the Appellant in the return of income filed that said property is deemed let-out property. 3. The CIT (A) failed to appreciate the fact that the said premises is a commercial premises which was already on Departmental records of earlier and subsequent Assessment Years Le Assessment Year 2015-16 and Assessment Year 2017-18 wherein the Appellant was subjected to scrutiny assessment, and the said premises was accepted as deemed let out property. 4. The learned CIT(A) has also erred in restricting the deduction of Interest paid for acquisition of the said premises at Rs.2,00,000/- as per second proviso to Section 24(b) of the Act, as against Rs.1,31,39,560)- claimed by the Appellant, without proper application of mind to the facts, submissions and law on the subject. 5. In view of the above, the CIT(A) be directed to delete the treat the said premises as deemed let out property and allow deduction for interest paid Rs.1,31,39,560/-. B. CHANGING CHARACTER OF PROPERTY FROM DEEMED LET OUT TO SELF- OCCUPIED PROPERTY, WITHOUT AUTHORITY 6. On the facts and in the circumstances of the case and in law, the learned CIT (A) has erred in confirming action of the Deputy Commissioner of Income Tax, CPC (the DCIT) in altering the nature of the said premises from Deemed Let out to Self-occupied, which is beyond the scope of adjustment permitted by Section 143(1)(a) of the Act. 7. In view of the above, the Order of the CIT(A) be quashed, by holding it to be bad in law. C. CONFIRMING ADJUSTMENT MADE IN THE ORDER U/S.143(1) WITHOUT EXAMINING WHETHER THE PRESCRIBED PROCEDURE SET OUT IN THE INCOME TAX ACT 1961 WAS FOLLOWED OR NOT 8. On the facts and in the circumstances of the case and in law, the learned CIT (A) has erred in confirming the adjustment made by the Deputy Commissioner of Income Tax, CPC (the DCIT") without examining whether the procedure set out in first and second proviso to Section 143(1Xa) of the Act was followed in the case of the Appellant.

In view of the above, the Order u/s 143(1) and Order u/s 154 be quashed, by holding it to be bad in law to the extent of adjustments made to the return of income of the Appellant. D. FAIR AND PROPER OPPORTUNITY OF BEING HEARD NOT GRANTED 10. On the facts and in the circumstances of the case and in law, the learned CIT (A) has erred in treating the said premises as self-occupied property and also erred in restricting deduction of interest u/s 24 of the Act to Rs 2,00,000- without giving the Appellant fair and proper opportunity of being heard and without following the principles and rules of natural justice 11. Despite making timely submissions and specific requests for obtaining opportunity of personal hearing through video conferencing, the Appellant was neither asked to show cause as to why said premises claimed to be deemed let out property should not be treated as self-occupied property, nor was personal hearing granted, before disposal of the appeal by the CIT(A). 12. In view of the above, the Order of the CIT (A) be quashed, by holding it to be bad in law E. NOT ALLOWING CARRY FORWARD OF HOUSE PROPERTY LOSS TO SUBSEQUENT YEARS RS.1,08,81,242/– 13. On facts of case, the learned CIT (A) erred in not allowing carry forward of loss under the Head Income from House Property to subsequent years Rs.1,08,81,242/- u/s.71B of the Act, as claimed by the Appellant. 14. In view of above, the learned CIT(A) be directed to allow the carry forward of loss under the Head Income from House Property to subsequent years Rs.1,08,81,242/– as claimed by the Appellant. F. GENERAL 15. All the above Grounds of Appeal are independent of and without prejudice to each other. 16. The learned CIT (A)'s Order being contrary to the law, evidence and facts of the case should be set aside, quashed or modified on the grounds deduced above. 17. The Appellant craves leave to add, modify or delete any ground at or before the hearings.‖

Treating let-out property as SOP and thereby restricting deductions of interest u/s 24(5) to Rs. 2,00,000/- per annum. 2. Not allowing carry forward of balance loss under the head House Property income amounting to Rs. 1,08,81,242/-. The rest of the grounds are pertaining to 234 B & C and interest & 244A. 4.2 Appellant's submissions are duly considered. Appellant submitted bank loan statement as proof of taking housing loan, on which interest is being paid. Appellant claims it is "deemed let-out property". As per income tax law, when an assessee has more than one house property, he can live in one property and all other properties are deemed let–out. Appellant claims he has no self occupied property in the relevant A.Y. This very claim would empty that one property should be considered to be self-occupied. Therefore the AO proceeded correctly and no interference is called for. The restriction of Rs. 2,00,000/- in my considered view, is on right lines. Therefore, appeal is liable to be dismissed on this ground. 4.2.2 As regards the issue of carry forward of loss from House Property, since the loss is restricted to Rs. 2,00,000, carry forward of balance loss under the head ―House Property‖ does not arise.‖