2023 (10) TMI 842 - AT - Income Tax

Income from house property - consider the Ambey Valley property as self-occupied property - AO rejected claim as it was not made in the original return of income - CIT(A) denied the claim as the claim was made during the assessment proceedings and not part of the return of income - HELD THAT - We find that during the course of assessment proceedings the assessee has revised computation of income where by the claim of the assessee was changed by withdrawing the amount offered under the income of house property and claiming Ambey Valley property as self-occupied property. AO held that as there was no claim by filling revised income, it was not entertained. On appeal before ld. CIT (A) the issue arose about allowbility of same claim but CIT(A) has held that the ground no. 1 of the appeal of the assessee is partly allowed. Ground no. 1.1 and 1.2 are with respect to considering Ambey Valley property as self occupied property and ground no. 1.3 is determining deemed annual value of the house property at the rate of 7%. CIT(A) has upheld that the 7% of cost of property as annual value taxable u/s 23, against the assessee and therefore only others ground are which are allowed by him. There is no reason given by him. Therefore, we restore ground back to the file of Ld. CIT(A) to give clear cut reason and finding that whether the claim of the assessee of considering Ambey Valley property as self-occupied property u/s 23(2) of the Act is allowable or not. Addition u/s 68 - claim of the assessee is that in the original return of income sale consideration was wrongly shown of ₹150,40,800/- whereas it is claimed by the assessee that property is sold at ₹ 78 lacs only, the market value of the property was stated to be ₹ 94,43,000/- - HELD THAT - As the sale agreement produced before us along with the revised computation shows that the sale consideration of the flat as Rs. 78 lacs whereas market value of flat is Rs. 94,43,000/-. We set aside this issue to the file of the Ld. CIT(A) also where the assessee is directed to substantiate that actual sale consideration received in his books of account is only ₹ 78 lacs and there is no credit of ₹ 1,15,00,000/- as mentioned in the computation of total income filed with original return of income and thus there cannot be any addition u/s 68 of the Act as above sum was not mentioned in books of account. Accordingly, the ground no.3 of the appeal is allowed with above direction. Appeal filed by the assessee is partly allowed for statistical purposes

Summary

Issues Involved:
The issues involved in this legal judgment include determination of annual value of properties, treatment of properties as self-occupied, disallowance of interest expenditure, addition under section 68 of the Income Tax Act, and appeal against the appellate order.

Annual Value of Properties:
The assessee had claimed loss from income from house property and income from other sources. The AO determined the annual value of properties at 7% of the cost of property, following previous decisions. The CIT(A) upheld this determination based on past cases.

Treatment of Properties as Self-Occupied:
The assessee claimed that the Ambey Valley property should be considered as self-occupied property from a certain date. The CIT(A) allowed this claim, considering the circumstances and previous decisions in favor of the assessee.

Disallowance of Interest Expenditure:
The AO disallowed a portion of the interest expenditure claimed by the assessee under section 24(b) of the Act. The CIT(A) dismissed the claim, leading to an appeal by the assessee.

Addition under Section 68 of the Act:
The AO made an addition under section 68 of the Act due to a discrepancy in the reported sales consideration of a property. The CIT(A) upheld this addition, stating that the claim was not admissible as it was made during assessment proceedings and not by filing a revised return.

Appeal Against the Appellate Order:
The assessee appealed against the CIT(A)'s order, raising various grounds. During the hearing, one ground was dismissed, while others were partly allowed. The appellate tribunal directed specific actions for the issues related to the treatment of properties as self-occupied and the addition under section 68 of the Act.