VAMSHIDHAR RAO PAIDIPALLY,HYDERABAD vs. INCOME TAX OFFICER, WARD-8(1), HYDERABAD

At the outset, there is a delay of 90 days in filing the present appeal before the Tribunal. The learned counsel for the assessee, Shri Y.V. Bhanu Narayan Rao, C.A., submitted that the assessee has filed an affidavit of Shri Srikanth, who is looking after the administrative, financial and income-tax related matters of the assessee, explaining the reasons for the delay. It was submitted that, Shri Srikanth was entrusted with coordination with auditors and monitoring the ITBA portal on behalf of the assessee. It was further submitted that, Shri Srikanth had gone to his native place at Machilipatnam in the second week of March, 2025, on account of serious illness of his mother. However, mother of Shri Srikanth unfortunately passed away on 08.06.2025, and thereafter, he had to stay back at his native place to perform rituals and attend related ceremonies, due to which he could rejoin duties only on 25.06.2025. It was further submitted that, only upon rejoining duties and visiting the auditors’ office on 30.06.2025 for submission of accounts and related details for the financial year ended 31.03.2025, it came to his notice that, the order passed by the Ld. CIT(A), NFAC, Delhi dated 26.03.2025 for assessment year 2018-19 had already been uploaded on the ITBA portal. Immediately thereafter, the assessee was informed and necessary steps were taken for filing the appeal before the Tribunal, which ultimately came to be filed on 29.08.2025, resulting in delay of 90 days. It was further submitted that the delay occurred due to the prolonged absence of Shri Srikanth, who was handling the tax matters of the assessee, on account of the illness and death of his mother, and not due to any deliberate negligence or intentional lapse on the part of the assessee. Therefore, it was prayed that the delay may kindly be condoned in the interest of justice.

The learned Sr. A.R. for the Revenue, Dr. Sachin Kumar, on the other hand, did not seriously object to the condonation petition filed by the assessee, in view of the reasons explained in the affidavit.

We have heard both parties and perused the petition and affidavit filed in support of the condonation petition seeking condonation of delay of 90 days in filing the appeal before the Tribunal. We find that, the reasons explained by the assessee appear to be bona fide and constitute reasonable cause for not filing the appeal within the prescribed time. The Hon'ble Supreme Court in the case of Collector, Land Acquisition Vs. MST. Katiji reported in 167 ITR 471 (SC), has laid down that a liberal and pragmatic approach should be adopted while considering applications for condonation of delay so as to advance substantial justice. Similar view has been taken by the Hon'ble Karnataka High Court in CIT &

The brief facts of the case are that, the assessee is an individual, filed his return of income for A.Y. 2018-19 on 28.09.2018, declaring total income of Rs. 1,37,80,790/-, which consists of income from salary, loss from house property, and loss from income from other sources. The case was selected for limited scrutiny to verify “Income from house property”. During the course of assessment proceedings, the A.O. noticed that, the assessee had claimed interest paid on borrowed capital for Rs. 27,37,040/- and also pre-construction interest payment for Rs. 6,57,205/- totalling to Rs. 33,94,246/- against rental income of Rs. 6,80,000/-. The A.O.

Aggrieved by the assessment order, the assessee preferred an appeal before Ld. CIT(A). Before the Ld. CIT(A), the assessee has challenged the additions made by the A.O. towards disallowance of loss claimed under the heads “Income from house property” and “Income from other sources” by submitting relevant details and argued that, the A.O. misunderstood the statement of total income only on the ground of incorrect disclosure of certain particulars in the ITR form filed by the assessee and restricted loss to the extent of Rs. 2,00,000/- and computed the income from house property as against the loss declared by the assessee. The Ld. CIT(A), after considering the relevant submissions of the assessee and also taking note of the relevant details, observed that, the assessee has claimed interest on borrowed capital of Rs. 27,37,040/- as against the maximum permissible limit of Rs. 2,00,000/-. Further, the assessee has claimed pre-construction interest of Rs. 6,57,205/- by adjusting “Income from other sources” at Rs. 1,90,840/-. Therefore, taking into account relevant facts, the restricted interest claim of Rs. 27,37,040/- to the extent of Rs. 2,00,000/-. The Ld. CIT(A) allowed pre-construction interest payment of Rs. 6,57,205/-. Further, the Ld. CIT(A) has disallowed “Income from other sources” at Rs. 1,90,840/-, set off against the “Income from house property”.

Aggrieved by the order of Ld. CIT(A), the issue is now in appeal before the Tribunal.

The learned counsel for the assessee, Shri Y.V. Bhanu Narayan Rao, C.A. referring to the statement of total income filed by the assessee along with the return of income submitted that, the assessee has reported loss from house property to an extent of Rs.

The learned Senior A.R. for the Revenue, Dr. Sachin Kumar, on the other hand, supporting the order of Ld. CIT(A) submitted that, the assessee has failed to explain as to how the interest paid on borrowed capital is allowable to an extent of Rs. 27,37,040/-. Further, the assessee has also not properly explained the set-off loss claimed against “Income from other sources”. Therefore, the A.O. and Ld. CIT(A) after considering the provisions of Section 24(b) of the Act, have restricted, house property loan to Rs. 2,00,000/- and made addition towards the disallowance of loss claimed by the assessee. Therefore, he submitted that, the order of the A.O. and Ld. CIT(A) should be upheld.

We have heard both parties, perused the material available on record and had gone through the orders passed by the authorities below. The assessee has declared the total income of Rs. 1,37,80,789/- after claiming deduction under Chapter VI-A to the extent of Rs. 1,60,000/- in respect of deduction under Section 80C and deduction under section 80T of the Act. The assessee has reported “Income from business and profession” at Rs. 1,78,01,875/-. The assessee has reported loss from house property at Rs. 2,00,000/- and loss from “Income from other sources” at Rs.

Further, going by the statement of income filed by the assessee, the assessee has rightly computed the loss from house property at Rs. 29,18,246/-, by taking into account rental income, deduction for standard deduction, and interest paid on housing loan and arrived at loss from house property at Rs.29,18,246/-, but restricted the loss to an extent of Rs. 2,00,000/- and the balance loss of Rs.27,18,246/- has been carried forward to subsequent assessment years. Similarly, the assessee has computed loss from ‘Income from other sources’ at Rs. 23,85,086/-. The total loss incurred by the assessee from both the heads, i.e. loss from house property and loss from “Income from other sources” was at Rs.35,85,086/- and the assessee has claimed for set-off of total loss of Rs. 35,85,086/- against “Income from business and profession”. The A.O. and Ld. CIT(A) without properly reading the computations filed by the assessee misunderstood that, the assessee has claimed deduction for the entire interest paid on loan and one-fifth of pre- construction interest payment and set-off against income from other sources. Therefore, in our considered view, the additions made by the A.O. towards disallowance of loss from “Income from house property” and “Income from other sources” and sustained by the Ld.

In the result, the appeal filed by the assessee is allowed.

The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file