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2013 (5) TMI 389 - AT - Income TaxDisallowance of interest on loan u/s 24 - Loan taken for purchase of flat As per revenue deduction should not be allowed because the assessee could not co-relate the fact of obtaining loan and using it for the purchase of flat. - Held that - Appellant furnished balance sheets of the relevant assessment yeas to prove that the loan was taken in the year of purchase of flat and also furnished a confirmation letter, relevant bank statement and pass book to substantiate its claim of having paid the interest to the lenders. The submission made by the assessee in this regard has been simply brushed aside and the disallowance has been made and confirmed in a general way. In view of the foregoing, the authorities were not justified in refusing deduction u/s 24 in respect of interest incurred by the assessee on loan borrowed for purchase of flat. - Decided in favor of assessee.
Issues:
- Disallowance of interest deduction under section 24 of the Income-tax Act, 1961 for the assessment years 2003-2004, 2004-2005, 2005-2006, 2006-2007, and 2007-2008. Analysis: - Assessment Year 2003-2004: - The issue raised was the confirmation of disallowance of Rs.1,13,288 under section 24 of the Act regarding interest on a loan taken for the purchase of a flat. - The Assessing Officer disallowed the interest deduction as the assessee could not prove that the loan used for interest payment was taken for the flat purchase. - The CIT(A) upheld the disallowance, stating that actual payment of interest was not a condition for deduction under section 24(1)(vi) but the loan purpose needed to be proven. - The ITAT disagreed with the lower authorities, noting that the assessee provided balance sheets and evidence showing the loan was taken for the flat purchase. - The ITAT held that the deduction should not be denied as the loan purpose was adequately substantiated, ordering the deletion of the addition. - Overall Decision: - The ITAT found in favor of the assessee for all the appeals, stating that the interest is to be allowed as a deduction under section 24 for the computation of income from house property. - Consequently, all appeals were allowed, and the decision was pronounced on April 5, 2013.
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