2022 (10) TMI 372 - AT - Income Tax

Deduction u/s 80C - Whether the unclaimed deduction can be claim before the assessing authority without filing the revised return and whether the power of the appellate authority can allow the claim of deduction which was not claimed in the return of income. We adjudicate the second issue? - HELD THAT - Appellate authority has coterminous power to accept the deduction which was not claimed in ITR. So, the entire claim under section 80C is eligible claim of deduction. During the hearing the assessee had submitted all relevant documents which are also considered by the appellate authority. We accept the claim of assessee related to deduction u/s 80C. We set aside the order of the ld. CIT(A) with a direction to allow the deduction, claimed by the assessee. Appeal of assessee allowed.

Summary

Issues Involved:
- Disallowance of interest on housing loan and tuition fee under sections 24(b) and 80C
- Direction to place documents of life insurance premium on assessment record
- Power of appellate authority to allow deductions not claimed in the return

Analysis:

Issue 1: Disallowance of Interest on Housing Loan and Tuition Fee
The appellant challenged the order disallowing 50% of the claim of interest on the housing loan under section 24(b) and disallowing deductions under section 80C for tuition fee and repayment of housing loan. The appellant argued that the wife being a joint-holder in the loan did not affect the appellant's eligibility for the full deduction. The ITAT held that the wife, being a co-borrower, was not eligible for the claim of interest under section 24 and directed the revenue to allow the balance deduction to the appellant. The ITAT considered the relevant documents submitted by the appellant and accepted the claim of deduction under section 80C, setting aside the order of the CIT(A).

Issue 2: Direction to Place Documents of Life Insurance Premium
The CIT(A) had directed the appellant to place documents of life insurance premium paid on the assessment record and further directed the AO to allow the claim under section 80C after obtaining the relevant document. The ITAT, after considering the submissions and relevant documents, rejected the direction to place the documents on the assessment record and instead allowed the deduction claimed by the appellant under section 80C.

Issue 3: Power of Appellate Authority to Allow Deductions Not Claimed in the Return
The appellant had raised the issue of whether deductions not claimed in the return of income could be allowed by the appellate authority. The ITAT analyzed various judgments and held that the appellate authority has the power to accept deductions not claimed in the return. The ITAT accepted the claim of deduction under section 80C made by the appellant during the appeal proceedings, emphasizing that the appellate authority has the discretion to allow such claims. The ITAT allowed the appeals of the assessee based on the above analysis.

In conclusion, the ITAT allowed the appeals of the assessee, directing the revenue to allow the balance deduction of interest on the housing loan and accepting the claim of deduction under section 80C. The ITAT emphasized the power of the appellate authority to consider and allow deductions not claimed in the return of income, ensuring a judicious consideration of the appellant's claims.