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TMI Blog2015 (10) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... computing. income of second property, acquired during the year, which remained idle, on the ground that the details of ALV were not furnished by the appellant. The AO may be directed to adopt Municipal Rateable Value for second property as per the decision of the jurisdictional Bombay High Court in the case of M. V. Sonavala V CIT (177 ITR 246) 2. On the facts and in the circumstances of the case, the learned CIT(A)-3 Mumbai erred in not allowing the full interest of Rs. 3,50,641/- paid for the second property, as the same was treated as deemed let out by the AO. 2. Ld. AR of the assessee did not press Ground No.1, therefore, the same is dismissed as not pressed. 3. Apropos Ground No.2, the facts are that the assessee is owner of two pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only property in the shape of Flat at Bandra will fall within the ambit of section 23(2) and the restriction of interest would be applicable to that property and in respect of Nestle Property no interest limit is fixed by the statute. 5. On the other hand, Ld. DR relied upon the order passed by A.O and Ld. CIT(A). 6. We have heard both the parties and their contentions have carefully been considered. To understand the controversy it will be relevant to reproduce section 24 and 23 of the Act. Section 24. Deductions from income from house property.-- (1) Income chargeable under the head " income from house property " shall, subject to the provisions of sub-section (2), be computed after making the following deductions, namely:-- (i) in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty is let out in parts, that portion of the annual value appropriate to any vacant part, which is proportionate to the period during which such part is wholly unoccupied; and (x) subject to such rules as may be made in this behalf, the amount in respect of rent from property let to a tenant which the assessee cannot realise. (2) The total amount deductible under sub-section (I) in respect of property of the nature referred to in sub-section (3) of section 23 shall not exceed the annual value of the property as determined under section 23. Section 23. Annual value how determined.--(1) For the purposes of section 22, the annual value of any property shall be deemed to be the sum for which the property might reasonably be expected to le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of his own residence, the annual value shall first be determined as in sub-section (I) and further be reduced by one-half of the amount so determined or one thousand eight hundred rupees, whichever is less: Provided that where the sum so arrived at exceeds ten per cent. of the total income of the owner, the excess shall be disregarded. Explanation.--Where any such residential unit as is referred to in the second proviso to sub-section (I) is in the occupation of the owner for the purposes of his own residence, nothing contained in that proviso shall apply in computing the annual value of that residential unit. (3) Where the property referred to in sub-section (2) consists of one residential house only and it cannot actually be occupied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at at Bandra falls under the category of property mentioned in section 23(2) of the Act as AO did not assess the ALV of the said property as income of the assessee. Therefore, provisions of second proviso to section 24 would not be applicable and the case of the assessee would fall within clause (b) of section 24 in which there is no limit for allowability of the interest and the condition is that the said property should inter-alia be acquired out of borrowed capital. In the present case as per submissions of the assessee before AO vide letter dated 13/09/2010 which are reproduced in para-4.4 of the assessment order the assessee has paid interest of Rs. 3,50,641/- as interest for Nestle Property. Therefore, interest deductible out of ALV o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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