2016 (11) TMI 393 - AT - Income Tax

Claim of interest made u/s. 24(b) disallowed - completion certificate indicating completion of the flat - Held that - A careful perusal of the second proviso to section 24 would show that the assessee should acquire or complete construction within three years from the end of financial year in which the capital was borrowed. In the instant case, the assessee has furnished certificate from the Cooperative Society to show that the possession of the flat was taken in October 2006 and March 2007. Further, the proviso nowhere states that the assessee should furnish completion certificate from the appropriate (Government) authorities. In our view, the evidences furnished by the assessee sufficiently prove that the assessee has taken possession of the flat during the relevant financial year under consideration. Accordingly we are of the view that the assessee is entitled to claim deduction u/s 24(b) of the Act. - Decided in favour of assessee

Summary

Issues:
Claim of deduction u/s. 24(b) of the Income Tax Act based on possession of flat without completion certificate.

Detailed Analysis:

Issue 1: Claim of deduction u/s. 24(b) of the Income Tax Act
The appeal was filed against the order confirming the rejection of deduction claimed by the assessee u/s. 24(b) of the Income Tax Act for the assessment year 2007-08. The assessee had purchased a flat and claimed deduction of interest under section 24(b). The Assessing Officer disallowed the claim as the completion certificate indicating the flat's completion during the relevant financial year was not provided by the assessee. The CIT(A) upheld this decision, stating that the assessee did not furnish the completion certificate from the appropriate authority.

Issue 2: Submission by the Assessee
The assessee submitted that the flat was ready by October 2006, with possession given in the same month and final possession granted in March 2007. The assessee provided a certificate from the Cooperative Housing Society to support these claims. The assessee argued that possession of the flat was taken, fulfilling the requirements of the second proviso to section 24 of the Act.

Issue 3: Department's Argument
The Departmental Representative contended that since the assessee did not provide a completion certificate from the appropriate authority, the possession of the flat was not conclusively proven.

Issue 4: Tribunal's Decision
After considering the arguments, the Tribunal found merit in the assessee's submissions. The Tribunal noted that the second proviso to section 24 does not mandate furnishing a completion certificate from government authorities. The evidence presented by the assessee, including the certificate from the Cooperative Society, established that possession of the flat was taken during the relevant financial year. Therefore, the Tribunal held that the assessee was entitled to claim the deduction of ?1,50,000 under section 24(b) of the Act. The order of the CIT(A) was set aside, directing the Assessing Officer to allow the deduction claimed by the assessee.

Conclusion:
The appeal filed by the assessee was allowed, and the Tribunal pronounced the order on 19.10.2016, granting the deduction of ?1,50,000 claimed by the assessee u/s. 24(b) of the Income Tax Act for the assessment year 2007-08.