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Interpretation of section 24(1)(x) of the Income-tax Act, 1961 regarding deduction for unrealized rent under the head 'Income from house property'. Detailed Analysis: The case involved a reference under section 256(1) of the Income-tax Act, 1961 for the assessment years 1982-83, 1983-84, and 1984-85. The primary question was whether the Tribunal was correct in law in holding that the loss under the head 'Income from house property' should be recomputed after allowing a deduction of Rs. 96,000 under section 24(1)(x) on account of unrealized rent, subject to certain conditions. The assessee, a company owning a property in Calcutta, claimed the deduction as the tenant, Soviet Consulate, did not pay rent, and the original lease had expired. The Income-tax Officer estimated the annual letting value at Rs. 96,000, which was challenged by the assessee but upheld by the Commissioner of Income-tax (Appeals). The Appellate Tribunal considered the claim for deduction under section 24(1)(x) and found that the conditions for deduction were fulfilled as the tenant had not paid rent after the lease expiry, and the assessee had taken steps to recover the rent. The Tribunal allowed the deduction of unrealized rent of Rs. 96,000 per year, restricting the loss to the amount claimed by the assessee. The central issue was whether the conditions prescribed in section 24(1)(x) were satisfied. The Tribunal's decision was based on the premise that the rent was lost and irrecoverable after the lease expiry, leading to the allowance of the deduction. However, the High Court disagreed with this interpretation. It noted that the tenant, Soviet Consulate, had tendered the rent, which was refused by the assessee primarily on the grounds of the tenant being a trespasser post-lease expiry. The rent was being deposited with the Rent Controller, indicating it was recoverable. The Court held that the assessee had not taken all reasonable steps to recover the rent and that the conditions for deduction under section 24(1)(x) were not met. Ultimately, the High Court ruled against the assessee, concluding that the conditions for deduction were not fulfilled, and the assessee was not entitled to the deduction under section 24(1)(x). The judgment favored the Revenue, and no costs were awarded. Both judges, SHYAMAL KUMAR SEN and AJIT KUMAR SENGUPTA, concurred with this decision.
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