2022 (8) TMI 788 - AT - Income Tax

Rectification of mistake u/s 154 - income under the head of House Property Income - Action of the AO in not giving the benefit made by the AO on account of interest paid on house loan and erred in sustaining the addition on account of house property which is allowable as per law - HELD THAT - From the order of the ld. CIT(A), it appears that the ld. CIT(A) has not taken into consideration the entire submission of the assessee but observed that the appellant has also not filed the copy of Home Loan Interest Certificate to allow. In the absence of claim in the return filed and non-submission of evidence during the appeal proceedings, the relief cannot be granted. Hence, the appeal is dismissed. Further the order of the ld. CIT(A) does not indicate that he has asked for the copy of such home loan interest certificate as well as other evidences to settle the issue in dispute. However, the assessee has very explicitly filed the details as to the calculation in the income tax return as well as income from house property. At both the places, the income chargeable under the head House Property holds good similar amount of Rs.1,37,444/-. Hence, there is no question of confirming the disallowance of interest paid on house property amounting to Rs.1,56,556/-. Keeping in view the above facts, circumstances of the case, computation of ITR, salary certificate issued by Bank of Baroda and house property income shown at Rs.1,37,444 in the ITR Form of the assessee as well as the Certificate dated 26-04-2021 issued by the Manager (Credit) Bank of Baroda, Jaipur as to the payment of Rs.1,56,556/- against the loan taken by the assessee from the Bank support the contention of the assessee. Hence, we do not concur with the findings of the ld. CIT(A) which is reversed. Thus the Ground No. 1 and 2 of the assessee is allowed.

Summary

Issues:
1. Validity of the order u/s 154 r.w.s 143(1) and notices
2. Disallowance of interest paid on house loan
3. Charging of interest u/s 234ABC

Issue 1: Validity of the order u/s 154 r.w.s 143(1) and notices:
The assessee, a salaried individual, filed a return of income for the assessment year 2018-19, which was processed u/s 143(1) determining total income at Rs.14,31,270/-. The AO added back Rs.1,56,556/- to the returned income under House Property Income. The assessee filed a rectification application which was rejected. The ld. CIT(A) dismissed the appeal, stating that there was no claim of interest payable on borrowed capital in the return filed. The appellant argued that the interest payable was mistakenly not reflected in the return but was part of the computation of total income. The Tribunal observed that the income chargeable under the head 'House Property' was the same at both places in the return, thus allowing the appeal.

Issue 2: Disallowance of interest paid on house loan:
The assessee argued that the interest paid on the house loan was wrongly disallowed by the AO and confirmed by the ld. CIT(A). The assessee contended that the interest claim was not reflected due to a technical error, but all calculations were present in the computation of total income. The Tribunal noted that the income chargeable under the head 'House Property' was consistent in the return and computation, supporting the assessee's claim. The Tribunal reversed the findings of the ld. CIT(A) and allowed the appeal.

Issue 3: Charging of interest u/s 234ABC:
As the Tribunal allowed the appeal on the disallowance of interest paid on the house loan, the consequential issue of charging interest u/s 234ABC became infructuous.

In conclusion, the Tribunal allowed the appeal filed by the assessee, overturning the decisions of the AO and ld. CIT(A) regarding the disallowance of interest paid on the house loan. The Tribunal emphasized the consistency in the income chargeable under the head 'House Property' in the return and computation, supporting the assessee's position.