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Facts
The assessee filed its return for AY 2017-18 declaring a total income of Rs. 13,71,950/-. The Assessing Officer (AO) disallowed a claim for property tax of Rs. 5,71,220/- and also disallowed the set-off of brought forward losses. The CIT(A) upheld the AO's order.
Held
The Tribunal restored the issue of property tax deduction to the AO for verification, directing that if the land was treated as non-agricultural and tax was charged accordingly, the deduction should be allowed. The Tribunal also directed the AO to verify the claim for set-off of brought forward losses under section 71B and allow them after due verification.
Key Issues
Disallowance of property tax deduction and denial of set-off of brought forward losses.
Sections Cited
250, 234B, 234C, 270A(1), 270A(9)(a), 71B
AI-generated summary — verify with the full judgment below
Before: SHRI AMIT SHUKLA & SMT. RENU JAUHRI
Appellant by : Shri Ninad Patade Respondent by : Shri Manoj Kumar Sinha Date of Hearing 28.08.2024 Date of Pronouncement 24.10.2024 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai-16/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 20.120.2023 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2017-18.
A.Y. 2017-18 Anglo Eastern Institutes Pvt. Ltd.
The assessee has raised following grounds of appeal: “1. Ground No. 1 Disallowance of tax paid in connection with land of Rs. 5,71,220/- while determining income under the head 'Income from house property' The Ld. CIT(A) erred in confirming the action of the Assessing Officer in disallowing tax paid of Rs. 5,71,220/- Inclusive of arrears of tax amounting to Rs. 1,35,760/- without appreciating the fact that the Property tax department l.e., Talathi office (Karjat) had determined the tax by treating the land as 'non- agricultural' in nature and had recovered property tax as per non-agricultural land.
2. Ground No. 2 Non granting set off of losses brought forward from prior assessment years The Ld. CIT(A) erred in confirming the action of the Assessing Officer in not granting set off of losses aggregating to Rs. 97,19,747/- which were brought forward from prior assessment years without appreciating that the losses are available for set off with income under the head house property as per section 71(B) of the Act.
3. Ground No. 3 - Levy of interest under section 234B of the Act The Ld. AO has erred in law and in fact, in levying interest under section 2348B of the Act.
4. Ground No. 4 - levy of interest under section 2340 of the Act The Ld. AO has erred in law and in fact, in levying interest under section 234C of the Act.
5. Ground No. 5-Penalty under section 270A(1) of the Act The Ld. AO erred in initiating penalty proceedings under section 270A(1) read with section 270A(9)(a) of the Act for misrepresentation.”
3. The brief facts of the case are that the assessee filed return for AY 2017- 18 declaring total income of Rs. 13,71,950/-. The case was selected for scrutiny. The assessee has shown income from house property and other sources. While computing the income from house property, the AO disallowed the claim of property tax to the extent of Rs. 5,71,220/- on the ground that payment of Rs.
A.Y. 2017-18 Anglo Eastern Institutes Pvt. Ltd.
4,35,460/- towards the tax paid for agricultural land at Khandpe and Mulgaon and Rs. 1,35,760/- being tax paid for new agricultural land in Karjat, District Raigad. Further, the brought forward losses of previous year claimed by the assessee against the income from house property during the year was also disallowed.
The assessee filed an appeal before the Ld. CIT(A) who vide order dated 20.12.2023 did not accept the assessee’s contention that the property tax was levied by treating the land as non-agricultural, and therefore deduction was allowable. Similarly, with respect to claim of brought forward losses against the income from house property also, the Ld. CIT(A) did not accept the assessee’s contention and upheld the order of the AO. Aggrieved with the Ld. CIT(A)’s order, the assessee is before us.
Ld. AR, during the course of hearing, submitted that the denial of deduction on account of property tax paid against the income from house property on the ground that it is paid in respect of an agricultural land is not justified. He has furnished the demand notice issued by Talathi office, Karjat, District Raigad to establish that the land in question has been treated as non- agricultural and property tax have been accordingly charged. As such, deduction of Rs. 2,71,220/- paid as property tax is an allowable deduction while computing income from house property. It is seen that these documents were not filed before the AO and only proof of payment was submitted during the A.Y. 2017-18 Anglo Eastern Institutes Pvt. Ltd.
course of assessment proceedings. We, therefore, deem it proper to restore the issue to the AO for the limited purpose of verification of relevant supporting documents with direction to allow the assessee’s claim of deduction of property tax paid in case it has been charged by treating the land as non-agricultural. 6. The second ground of appeal pertains to claim of brought forward losses which were not allowed to be set off of against the Income from House Property by the AO. Ld. AR has pointed out that as per the provisions of section 71B the carry forward and set off loss from house property is allowable against the income from house property assessable for the relevant assessment years.
7. The sole ground for the disallowance of claim of carry forward loss as mentioned by AO is that the loss for AY 2010-11 is not regular assessed, and therefore, the assessee was not entitled to claim of loss. Ld. CIT(A) also upheld the order of the Ld. AO on the same ground.
8. We find that section 71B allows the assessee to carryforward and set off loss from house property in the following assessment years upto 8 years from the assessment year during which the loss was incurred. The AO is, therefore, directed to verify the assessee’s claim in the light of provisions of section 71B and allow the carryforward and set off of earlier years’ losses after due verification.
9. Ground No. 3 & 4 relate to charging of interest u/s 234B & 234C which are not being pressed.
A.Y. 2017-18 Anglo Eastern Institutes Pvt. Ltd.
Ground No. 5 relates to initiation of penalty proceedings u/s 270A(1) r.w.s 270A(9)(a) is dismissed being premature.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 24.10.2024.
Sd/- Sd/- AMIT SHUKLA RENU JAUHRI (न्यातयक सदस्य/JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER)
Place: म ुंबई/Mumbai दिनाुंक /Date 24.10.2024 अननकेत स ुंह राजपूत/ स्टेनो आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतिकरण/ ITAT, Bench, Mumbai.