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Issues involved: Determination of self-occupied property status for flats, treatment of foreign exchange loss as business loss.
Self-occupied property status for flats: The appellant, a playback singer, appealed against the order of the CIT(A) regarding the treatment of flats as deemed let-out properties. The A.O. estimated house property income at 8% of the cost of acquisition for five residential properties in Mumbai and Pune. The appellant claimed self-occupied status for the flat at Vikas Anand, Khar, as it was more beneficial. The CIT(A) upheld the Maryland property as self-occupied based on the appellant's previous return. The ITAT held that the A.O. should have considered the Vikas Anand property as self-occupied, given the change in ALV computation method and the appellant's benefit. The decision was based on Section 23(4) and the principle against taking advantage of the appellant's ignorance of the law. Treatment of foreign exchange loss: The appellant claimed a loss of &8377;24,68,715 on foreign exchange difference, following the cash system of accounting. The A.O. disallowed the loss as notional and not allowable under Section 37(1). The CIT(A) upheld this decision, stating the loss pertained to the appellant's capital account and was not akin to trading loss. The ITAT agreed, emphasizing that consistency in offering notional income in previous years did not entitle the appellant to claim the loss as a deduction. The claim for reversal of income from earlier years was rejected, and the loss on a notional basis was deemed disallowable. In conclusion, the ITAT partly allowed the appeal, directing the A.O. to consider the Vikas Anand property as self-occupied and dismissing the claim for the foreign exchange loss as a business loss. [Judgment: Appellate Tribunal ITAT MUMBAI, Citation: 2011 (9) TMI 1179 - ITAT MUMBAI]
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