SURJIT SINGH,NEW DELHI vs. DCIT, CIRCLE- 3(1)(2), INTERNATIONAL TAXATION , NEW DELHI

Ld. AR has argued the present appeal primarily on following two substantive grounds :-

In respect of the interest claimed by the assessee u/s 24(b) of the Income Tax Act, 1961 it was the contention of the Ld. AR that the assessee has taken loan on the three properties for which the assessee has claimed deduction under section 24(b) on the interest paid. Our attention was drawn to page 19 of the order of the Ld. CIT(A) wherein he had reproduced the certificate from the bank filled by the assessee, mentioning therein that house loan was taken on the property. Letter provides as under :-

Further our attention was drawn to para 4 of the assessment order, wherein AO had tabulated the interest paid by the assessee during the year on the three properties namely SG-106, and SG-65, , it mentioned as under :-

It was submitted, that the assessee during the assessment proceedings was not able to produce the evidence , to prove loan against house property, either in the form of loan document or in the form of interest certificate from the Bank , to claim the deduction of the 4

Assessee has submitted that in the previous and subsequent assessment years the assessee was allowed deduction u/s 24(b) in respect of all these properties and no issue was raised by the AO in respect thereof.

It was submitted by the Ld. AR that the assessee had filed the sale deed in respect of shop No. SG-65 which was purchased by the assessee along with his wife vide registered sale deed dated 25th June 2004. In the registered sale deed it is mentioned that the assessee had purchased the property No. SG-65 for a total consideration of Rs. 71,27,707/-. Further the Schedule-II of the said sale deed provide the details of the payment made by the assessee and his wife to the vendor :-

The assessee has claimed in respect of the property bearing No. SG 106 that the property was purchased after taking the loan from State Bank of Travancore and for that the confirmation of vendor DLF Commercial Developers Limited is enclosed.

It was submitted that the assessee initially had taken the loan from the Citi Bank which was later on transferred to State Bank of Travancore and thereafter it was transferred to Aditya Birla Finance Ltd.. It was further submitted that the financial institutions have directly paid to the vendors, Ld. CIT(A) has reproduced the contention of the assessee as under :-

It was submitted that as the assessee had taken loan from the financial institutions and paying the interest to them therefore the assessee was entitled to claim u/s 24(b) of the Act.

It was also submitted by the Ld. AR that the AO had not made inquiries from the correct person of the bank u/s 133(6) of the Act. It was further submitted that the AO had not disclosed from whom the inquiries were made i.e whether it was made from Aditya Birla Finance

On the other hand the Ld. DR for the revenue relied upon the order passed by the lower authorities. It was submitted by Ld. DR that no certificate of interest was provided by the assessee in respect of all the three properties from the bank for which the claim was made u/s 24(b) and further no evidence was provided to support that the loan was taken by the assessee for the purposes of purchasing the property.

We have considered the rival contention of the parties and perused the material available on record, including the judgments cited at bar during the course of hearing by both the parties. Admittedly no evidence in respect to payment of interest by the assessee to the financial institution in the form of the certificate of interest issued by the banks was produced before the lower authority. However nonetheless, the previous and subsequent assessment years the assessee’s claim of deduction under section 24(b) have not been denied by the assessing officer. In our considered opinion for the purposes of claiming the benefit u/s 24(b) it is essential for the assessee to produce

In the present case neither the assessee has produced the evidence of taking the housing loan nor the assessee has furnished any certificate from the bank from whom assessee has taken loan. In the present case, since the AO had been granting the benefit in the previous year but had denied the same in the impugned assessment year and considering the peculiarity of the fact we deem it appropriate to remand bank the matter to the file of the AO with the following directions :- I. The AO is directed to issue notice u/s 133(6) to the officials from all or one of them namely Citi Bank, Aditya Birla Finance Ltd. and State Bank of Travancore the actual deed of sanction along with other documents of house loans in respect to all the three properties. AO is directed to bring on record, name/s, amount, period, terms and purposes the loan was sanctioned II. The AO is directed to issue the notice u/s 133(6) to the official of the DLF Commercial Developers Limited with a view to find out whether any consideration was paid and how much amount was paid by the wife of the assessee and assessee in respect to all three properties. III. The AO is also directed to find out whether any consideration was directly paid by the financial institution as 9

Apropos, the second issue of not allowing the benefit of non receipt of the rent u/s 24(1)(x).Firstly It was submitted that the said provision was substituted by the other provision namely 23(1)(c). Based on the said section, AR submitted that AO was duty bound to consider whether the property or any part of the property was vacant during the whole or any part of previous year and non receipt of rent for that period. He had drawn out attention to Section 23(1) (c ), which is to the following effect:

In respect of claim u/s 23(1(c) for not receiving the rent on account of the dispute with the tenant of the property , Ld. AR submitted that the tenant was fraud and he has not paid the rent for sufficient period to the assessee and in fact left the premises after putting the lock on it . AR had submitted that despite furnishing the evidence by the assessee to the AO, the AO has not given the benefit of section 23(1)(c). Similarly CIT(A) had also declined the relief to the assessee.

Ld. AR during the course of argument had submitted that Police aid was taken for the purpose of breaking up of the locks and taking back the possession. He had submitted that the matter may kindly be remitted back to the file of the assessing officer for fresh examination.

Ld. DR has strongly disputed the above said contention and it was submitted that no evidence was furnished with respect of non receipt of the rent during the period for which the benefit was sought u/s 23(1)(c) of the Act.

We have considered the rival contention of the parties and perused the material available on record, including the judgments cited at bar during the course of hearing by both the parties. Since we are remanding back the other grounds to the file of the AO, therefore, we deem it appropriate to remand back this ground also to the file of the AO with the directions to the assessee to provide the details of the litigation, if any , which took place between the assessee and the tenant . Assessee is directed to produce proof of non receipt of rent if any . Assessee is also directed to provide the electricity bill / maintenance bill of the property in question to establish the property was not in use by the tenant for this period and was vacant. AO is directed to consider these evidences and/ or any other evidence as may deem appropriate and thereafter decide the issue in accordance with law after affording due opportunity of hearing to the assessee in accordance with the principle of natural justice.