2003 (4) TMI 494 - AT - Income Tax

Summary

Issues:
- Appeal against the order of CIT(A) regarding deduction under section 24(1)(x) of the Income-tax Act.

Analysis:
1. Facts of the Case: The assessee derived income from business and property, including a property rented out to a company. The Assessing Officer added an amount on account of annual lettable value (A.L.V.) of the property, which the assessee contested, claiming deduction under section 24(1)(x) of the Act.

2. Claim Rejection: The claim of the assessee for deduction under section 24(1)(x) was initially rejected by the Assessing Officer and further by the CIT(A) on the grounds that the tax liability had to be borne first in the assessment year before claiming the deduction in subsequent years.

3. Applicability of Section 24(1)(x): The assessee filed an application under section 154 before the CIT(A), citing the judgment of the Hon'ble Supreme Court in a relevant case. The assessee argued that deduction for un-realized rent should be allowed not only in the concerned assessment year but also in subsequent years until full relief is obtained, based on the Supreme Court's ruling.

4. Decision of CIT(A): The CIT(A), after considering the submissions and the Supreme Court judgment, allowed the claim of the assessee for deduction in respect of unrealized rent. He also mentioned that any realized unrealized rent in the future would be taxed under section 25A of the Act.

5. Department's Appeal: The Department appealed against the order of the CIT(A), arguing that there was no apparent mistake on record justifying the rectification under section 154(1) of the Act.

6. Final Decision: The ITAT, after reviewing the submissions and the legal provisions, upheld the decision of the CIT(A) and dismissed the appeal of the Department. It was concluded that the assessee was eligible for deduction under section 24(1)(x) as per the law and the rectification made by the CIT(A) was justified based on the Supreme Court's judgment.

In summary, the judgment favored the assessee's claim for deduction under section 24(1)(x) based on the Supreme Court precedent, allowing relief for unrealized rent and dismissing the Department's appeal against the CIT(A)'s order.