2018 (12) TMI 745 - AT - Income Tax

Addition by way of set-off of interest expenditure under the head House Property - assessee claimed such deduction only by way of revised computation in the course of the assessment proceedings - Held that - Since the AO has not gone into the claim of the assessee no finding was given on the claims made by the assessee. The observations of the CIT(A) that since there is no adverse finding by the Assessing Officer, there is no justification in accepting the claim of the assessee is wrong. Since the AO has not gone into the claim of the assessee, we are of the view that this matter has to go back to the AO for proper verification of details of property acquired, rental income shown, loan borrowed for acquisition of property, interest paid on such loan etc., so as to satisfy that the condition u/s. 24(b) of the Act are complied for allowing such deduction. Thus, we restore the issue of deduction u/s. 24(b) of the Act to the file Assessing Officer for denovo consideration. AO shall provide adequate opportunity of being heard to the assessee and adjudicate the issue in accordance with law. Revenue s appeal allowed for statistical purpose.

Summary

Issues:
1. Whether the assessee is eligible to claim deduction u/s. 24(b) of the Act when no such claim was made in the return of income.
2. Whether the set-off of loss under the head house property against other heads is permissible without a revised return.

Issue 1: Deduction u/s. 24(b) Claim:
The appeal pertains to the Revenue challenging the deletion of an addition of INR 50,40,000 by way of set-off of interest expenditure of INR 93,64,517 under the head House Property. The dispute revolves around whether the assessee can claim deduction u/s. 24(b) of the Act when no such claim was initially made in the return of income. The Assessing Officer rejected the claim, emphasizing the absence of a revised return with the claim. However, the Ld.CIT(A) entertained and allowed the claim, citing the Hon'ble Jurisdictional High Court's decision in CIT v. M/s. Pruthvi Brokers & Shareholders (P.) Ltd. The High Court clarified that an assessee can make additional claims without filing a revised return. The ITAT directed the Assessing Officer to reexamine the deduction claim under section 24(b) to verify compliance with statutory conditions.

Issue 2: Set-off of Loss from House Property:
The third ground raised by the Revenue concerns the set-off of loss from income from house property against other heads without a revised return. This issue is linked to the first two grounds and is thus remanded to the Assessing Officer for reconsideration in line with the law. The ITAT found that since the Assessing Officer did not assess the claim made by the assessee, the matter needs proper verification regarding property details, rental income, borrowed loan for property acquisition, and interest paid on the loan to ensure compliance with section 24(b) conditions. Consequently, the ITAT allowed the Revenue's appeal for statistical purposes, directing a fresh assessment by the Assessing Officer after providing the assessee with a fair opportunity to present their case.

In summary, the ITAT Mumbai addressed the issues of claiming deduction u/s. 24(b) without an initial claim in the return of income and the set-off of house property loss against other heads. The judgment emphasized the assessee's right to make additional claims without revising the return, directing a reassessment by the Assessing Officer to verify compliance with statutory conditions. The decision highlights the importance of proper assessment and adherence to legal provisions in determining deductions and set-offs under the Income-tax Act.