2012 (10) TMI 577 - AT - Income Tax

Claim of deduction of Lease Rent - disallowance from income from the House Property - Held that - Assessee submitted that the lease rent paid by it to the NOIDA is actually tax levied to a local authority in respect of the property in question u/s 23 also he had produced a copy of the allotment letter of the said property in support before the CIT (A) but the same has not been considered. Remand the matter to the file of the AO to decide the issue afresh considering the contents of lease deed and any other documents filed by assessee to establish his contention - in favour of assessee fir statistical purposes.

Summary

Issues:
Disallowance of deduction of Lease Rent under Section 23 of the IT Act.

Analysis:
The assessee contested the first appellate order, arguing against the disallowance of the claim of deduction of Lease Rent under Section 23 of the IT Act from income from House Property. The Assessing Officer (AO) disallowed the deduction, stating it is not allowable under Section 24 of the Act. The AO added the amount of Lease Rent to the declared income of the assessee. The ld. CIT (A) upheld this decision. The assessee claimed that the deduction was under Section 23 for lease rent levied as local taxes by NOIDA, a local authority. The assessee provided an allotment letter of the property to support this claim. The ld. AR cited various legal precedents to support the claim for deduction under Section 23.

The ld. DR opposed the appeal, arguing that the lease rent paid cannot be equated with taxes levied by a local authority on house property for the assessee to claim a deduction under Section 23 of the Act. The Tribunal reviewed the orders and arguments presented. It found that the assessee contended that the lease rent paid to NOIDA was a tax levied by a local authority under Section 23. However, the Tribunal noted the lack of evidence supporting this claim. The Tribunal decided to remand the matter to the AO for a fresh decision, allowing the assessee an opportunity to be heard and to submit relevant documents, such as the lease deed, to establish that the lease rent is akin to property tax levied by NOIDA. The Tribunal allowed the appeal for statistical purposes, emphasizing the need for further examination and evidence.

In conclusion, the Tribunal remanded the case to the AO for reevaluation, highlighting the importance of substantiating the claim that the lease rent paid to NOIDA is equivalent to property tax under Section 23 of the IT Act. The decision to allow the appeal for statistical purposes indicates the need for a more thorough review and consideration of evidence in determining the eligibility for deduction of the lease rent amount.