9911796707
TMI Blog1986 (1) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... ds for the construction of the house and wanted deduction of Rs. 50,109 paid as interest in respect of the said loan from the rent and determination of the income from house property in a negative figure. The ITO allowed deduction for sum of Rs 4,175 being interest for the period during which the property was let out and denied deduction in respect of the balance holding that the interest paid for the period prior to the completion of the house was of the nature of capital expenditure. The assessee appealed to the AAC. He affirmed the ITO's order on the ground that in view of the proviso to section 23(1)(c) of the Act the income from property cannot be a loss, before us the learned counsel for the assessee contended that the learned AAC 's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed and that can result in a loss. For this he relied upon the judgement of the Madras Bench of the Tribunal in Paras Agarbati Co. v. Fourth ITO (1983) 6 ITD 468 (Mad.) in which a similar view was taken. It was observed in that case as below : "On a consideration of the facts and contentions of the parties we find considerable force in the assessee's contention. According to the order and sequence of the provisions of section 22 to 24, it is clear that the deduction contemplated under section 23 in respect of any residential unit is only for the purpose of determining the annual value of concerned property and in determining such annual value, there cannot be a loss figure and at best it can be a nil figure only, The deduction under s.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Madras Bench and, therefore, we follow it with respect Further the learned counsel for the assessee pointed out that the aforesaid restrictive clause in the provisio to section 23(1) has been deleted by the Finance Act, 1984 and the Explanation as below has been added to sub-clause (vi) of section 24(1) : "(vi) Where the property has been acquired, constructed repaired, renewed or reconstructed with borrowed capital. The amount of any interest payable on such capital. Explanation._ Where the property has been acquired or constructed with borrowed capital, the interest, if any, payable on such capital for the period prior to the previous year in which the property has been acquired or constructed, as reduced by any part thereof allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tively. The grievance mentioned in the memorandum of appeal is that the learned AAC erred in not deciding the ground of appeal in that regard. At the hearing before us the learned counsel for the assessee did not address any argument on the point and there is nothing before us to show that such a ground was actually raised and pressed before the learned AAC. This ground, therefore, is to be rejected. In the result the appeal is partly allowed. The ITO is directed to allow deduction for interest paid or payable by the assessee on funds borrowed and utilised for the assessee on funds borrowed and utilised for the construction of the house property for the period prior to1st March 1980in terms of section 24(1)(vi) and the Explanation thereto. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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