FRANCIS LISTON,ERNAKULAM vs. ITO, NON CORP WARD 2(1), KOCHI

Brief facts of the case are that assessee is an individual deriving income from salary. The return of income for the AY 2011-12 was filed on 30/06/2011 declaring income of Rs. 5,58,110/- and claimed refund of Rs. 14,749/-. The ITO, Non-Corp. Ward- Francis Liston 2(1), Kochi (for short, 'AO') issued a notice u/s. 148 of the Act on 22/03/2016. In response to the notice issued u/s. 148, the assessee filed return of income on 08/06/2016 declaring the same income as declared in the original return of income. Against the said return of income, assessment was completed by the AO vide order dated 28/07/2016 passed u/s. 143(3) r.w.s. 147 of the Act at a total income of Rs. 6,36,460/-. While doing so, the AO denied the claim of interest on housing loan of Rs. 78,356/- by holding that interest u/s. 24(b) cannot be allowed when the assessee had let out to the employer, which in turn was allotted on rent free accommodation to the assessee himself.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.

Being aggrieved, the assessee is in appeal before the Tribunal in the present appeal.

It is submitted that when the assessee is under the self lease scheme policy of the company-employer, the residential house owned by the employee was leased out to the company and the assessee was in receipt of lease rent and such house shall not be treated as self acquired house. However, rental income, the policy has been discontinued by the company w.e.f. 01/07/2010 and interest is allowable on self-occupied house. It is further submitted that Ld. CIT(A) in other employees’ cases allowed the claim for Francis Liston deduction of interest on housing loan as self-occupied house. I find force merit in the argument of the learned counsel for the assessee that the house allotted to him shall not be treated as self-acquired house. Accordingly, the appeal filed by the assessee stands allowed.