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Income Tax Appellate Tribunal, MUMBAI BENCH “F”, MUMBAI
Before: SHRI B.R.BASKARAN & SHRI PAWAN SINGH
O R D E R
PER PAWAN SINGH, JM:
The present appeal is filed by the assessee against the order of CIT(A)-26, Mumbai dated 08.08.2013 in respect of Assessment Year (AY) 2009-10 on the following grounds of appeal: (Each ground of appeal is without any prejudice to the others)
1. In law and on facts, the Commissioner Appeals erred in ruling that the loss from house property was to be assessed at Rs. 1,50,000 and not at Rs. 7,41,520 as returned by your Appellant. In doing so, the Commissioner appeals: 1.1 erred in ruling that the interest deductible under section 24(b) of the Income-tax Act, 1961 was to be restricted to Rs. 1,50,000 as against Rs. 7,54,645 claimed by your Appellant under section 24(b); 1.2 erred in not giving full effect to section 24(b); 1.3 erred in not giving full and proper effect to the provisions of section 23; and 1.4 erred in not considering as well as not addressing the submissions made by your Appellant on the said grounds during the appeal proceedings before him. Your Appellant prays that the Assessing Officer be directed to:
(i) grant deduction of interest under section 24(b) of Rs. 7,54,645 as claimed by your Appellant; and (ii) assess the loss from house property at Rs. 7,41,520 as returned by your Appellant. 2. In law and on facts, the Commissioner Appeals erred in (implicitly) ruling that your Appellant is liable to interest under section 234B. In doing so, the Commissioner Appeals: 2.1 erred by not addressing your Appellant's ground of appeal before him that your Appellant is not liable to interest under section 234B; and 2.2 erred in not considering as well as not addressing the submissions made by your Appellant on the said grounds during the appeal proceedings before him. Your Appellant prays that the Assessing Officer be directed to delete the interest charged under section 234B in its entirety.
3. In law and on facts, the Commissioner Appeals erred in (implicitly) ruling that your Appellant is liable to interest under section 234C. In doing so, the Commissioner Appeals: 3.1 erred by not addressing your Appellant's ground of appeal before him that your Appellant is not liable to interest under section 234C; and 3.2 erred in not considering as well as not addressing the submissions made by your Appellant on the said grounds during the appeal proceedings before him. Your Appellant prays that the Assessing Officer be directed to delete the interest charged under section 234C in its entirety. Your Appellant prays and craves leave to add, modify, amend or withdraw ground(s) of appeal during, or before the date of, the appeal proceedings before the Honourable Tribunal.
2. As per our opinion, the only issue/ground for our consideration is whether the assessee is entitled to claim loss under the head “House Property” by disallowing the interest.
3. The brief fact of the case are that the assessee is an individual and salaried person has filed her return of income on 16.07.2009 declaring total income of Rs. 4,61,321/-. The return of income was selected for scrutiny and statutory notice was served upon the assessee and during the assessment. 4. During the assessment the assessee was asked to submit the details regarding the loss of Rs. 7,41,520/- from house property and submitted before the Assessing Officer that the property jointly owned by her and her husband and the possession of the property was taken in March 2009 and the property was financed by way of home loan from City Bank, Mumbai and during the Financial Year (FY) 2008-09, she had paid aggregate interest of Rs. 15,09,289/- along with her husband and thus entitled to Rs. 7,54,645/- and she is entitled to the half of the interest, the co-owner of the property and by deducting deemed rent of Rs. 13,125/-, the assessee is entitled for los of Rs. 7,41,520/-. 5. The contention of the assessee was not accepted by the AO and the loss restricted to Rs. 75,000/- only i.e. 50% of Rs. 1,50,000/- and loss from the property calculated at Rs. 61,875/- only vide order dated 28.12.2011. 6. Against the order of assessment, the assessee filed an appeal before the CIT(A) and the CIT(A) while disposing of the appeal, allowed the deduction of Rs. 1,50,000/-, holding that rental income of this property cannot be assessed to tax u/s 23(4) of the Act and as the 2nd proviso to section 24(b) a deduction of Rs. 1,50,000/- is assessable as interest on the borrowed capital for self-occupied property. Against the order of CIT(A), the assessee preferred an appeal before us.
We have heard the Authorised Representative (AR) of the assessee and the Departmental Representative (DR) for revenue and perused the material available on record.
The assessee has also placed on record the copy of registered leave and licence agreement dated 12.06.2009, with M/s Diageo India Pvt Ltd, about the letting out the property i.e. Flat No. 901, Sky Flama ‘Dosti Flamingos’ for monthly licence fees of Rs. 37,500/-.
The assessee has filed the assessment order of her husband Shri Varadaraya Mallya for AY-2009-10, wherein her husband was allowed to claim loss from house property of Rs. 8,50,106/- in respect of the same property being co-owner of this said property. The assessee has also placed on record the copy of leave and licence agreement dated 12.06.2009 about the letting out the property i.e. Flat No. 901, Sky Flama ‘Dosti Flamingos’ for monthly licence fees of Rs. 37,500/-.
The ld. AR of the assessee has argued that section 23(4) of the Act comes into play only when there are more than one house property in the name of assessee and thus section 23(4) is not relevant in the case of assessee and as per section 24(b) full deduction of interest is allowable without any restriction or limitation subject to one exception that if the property in question is hit by the two proviso attached with section 24. The ld. AR of the assessee further argued that interest of Rs. 7,54,645/- paid by assessee in respect of property is fully deductible u/s 24(b) and the proviso limited to deduction to Rs. 1,50,000/- is not applicable to the assessee.
Section 23(2) may be read as under: (2) Where the property consist of a house or a part of house; (a) Is in the occupation of owner for the purpose of his own residence or (b) Cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at other place in a building not bellowing to him, The annual value of such house or part of his house shall be taken to be Nil.
Section 24(b) of the Act may be read as under: (b) Where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of interest payable of such capital.
4 Mrs. Vijaya Mallya Provided that in respect of the property referred to in sub-section 2 of 23, the amount of deduction shall not exceed to 30,000/- Rs. Provided further that where the property referred to in the first proviso is acquired or constructed with capital borrowed on or after 01.04.1999 and such acquisition or construction is completed within three year from end of financial year in which capital was borrowed, the amount of deduction under this section shall not exceed 2 lacs Rs.
We have to examine if in the present appeal section 23(2) is applicable or not, on careful consideration we find that clause b of sub-section 2 of section 23 is not applicable to the assessee. The assessee has also not actually let out the house. Since the assessee is owing only one house in our view section 23(2)(a) shall apply and accordingly the interest deduction has to be restricted to Rs. 1,50,000/- in accordance with 2nd proviso of section 24(b) of I.T. Act.
In view of the above discussion, we do not find any infirmity or illegality in the order passed by CIT(A), hence the appeal of the assessee on this ground is not accepted.
Rest of the ground raised
in the appeal are either incidental to the main ground or consequential and needs no adjudication at our end.
16. In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on this 15th January, 2016.