TMI Blog1989 (6) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... holding that the word 'income' used in the penultimate line of the second proviso to section 23(1) of the Income-tax Act, 1961, means 'annual letting value' ? " "2. If the answer to the above question is in the affirmative, whether the Tribunal was right in law in allowing loss which exceeded the annual letting value from the house property by Rs. 2,089 after allowing deduction of Rs. 1,200 under section 23(1) of the Act ?" In the reference relating to the assessment year 1975-76, one compendious question has been referred though the point involved is the same and that question reads as follows: "Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in allowing a loss of Rs. 1,000 representing loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly in view of the provisions of section 24 and accepted the claim made by the assessee. At the instance of the Revenue, the two questions relating to the assessment year 1974-75 were referred by the Tribunal. In respect of the assessment year 1975-76 also, the Income-tax Officer disallowed the claim of loss of Rs. 1,057 in respect of the very same house heard by a different Appellate Assistant Commissioner who, without reference to the earlier order relating to the assessment year 1974-75, dismissed the appeal. The assessee went up in appeal before the Tribunal. By the time the appeal came on for order, the appeal filed by the Revenue in respect of the assessment year 1974-75 had already been disposed of and, following the earlier decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that 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 be let from year to year or where the property is let and the annual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable. The relevant portion of the second proviso to sub-section (1) of section 23 may conveniently be set out at this stage : "Provided further that the annual value as determined under this sub- section shall,-. (b) in the case of a building comprising one or more residential units, the erection of which is begun after the lst day of April, 1961, and completed after the 31s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 24 in respect of such building, it wanted to take away such a benefit in respect of a building which would fall within the second proviso to that section, obviously for the reason that both are borrowed capital and the interest is paid on such borrowed capital. Further, the provision of section 23 itself is for the purpose of section 22 as specially stated therein and, therefore, it could not affect the deductions referred to in section 24. Nor is there any reason to restrict the deduction only to the extent of the income from the property and not beyond that. In the light of this set up, the proviso to sub-section (1) of section 23 shall be read, interpreted and understood as relating to the determination of the annual value and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 23 was omitted and the explanatory note relating to the same reads as follows : "9. 2. Apprehensions had been expressed that the above-quoted words may be construed to imply that no loss shall be allowed in respect of such new residential units even when the loss may arise as a result of other deductions claimed by the assessee, as for instance, interest paid on borrowed capital for purposes of constructing the residential building. With a view to removing any controversy or doubt in the matter, the abovequoted words have been omitted from the aforesaid second proviso. This would secure that the deduction admissible to the assessee under the provisions of section 24 of the Income-tax Act in computing the income from house property ..... X X X X Extracts X X X X X X X X Extracts X X X X
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