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2018 (12) TMI 1382 - AT - Income TaxReopening of assessment - claim of interest u/s 24 (b) against the rental income from Dhanwatay House - Held that:- Though an A.O in the backdrop of the judgment in the case of Goetze (India) Ltd. Vs. CIT [2006 (3) TMI 75 - SUPREME COURT] cannot entertain a claim for deduction/relief which had not been raised by the assessee in its return of income, otherwise than by filing a revised return of income, however, the appellate authorities were vested with a jurisdiction to entertain such claim as long as the same was borne from the facts available on record. We thus, without going into the intricacies of the facts we are of the considered view that on the basis of the judgment in the case of Pruthvi Broker and Share Holders Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] no infirmity does emerge from the order of the CIT(A) who remaining well within his jurisdiction had directed the A.O to allow deduction of the interest expenditure under Sec. 24(b) to the assessee also in respect of the Dhanwatay House, as per the method which was suggested by him for establishing a nexus between the interest bearing borrowed funds and utilization of the same towards the aforementioned properties, viz. (i) Dhapla House property; and (ii) Dhanwatay House property. We thus finding ourselves to be in agreement with the view taken by the CIT(A) - Decided against revenue Entitlement for claim of deduction of the interest expenditure u/s 24(b) in respect of the Dhanwatay House property, to the extent of his share of income from M/s M.D. Dhanwatay & others, AOP - Held that:- As given a thoughtful consideration to the observations of the A.O, and unable to persuade ourselves to subscribe to the interpretation of Sec. 67A(3) so accorded by him. Admittedly, the interest paid by a member on capital borrowed by him for the purpose of investment in the AOP shall, in computing his share chargeable under the head “Profit and gains of business or profession” is to be deducted from his said share of income. In case before us the claim of interest expenditure of the assessee, is not in context of any borrowed capital which had been utilized for making of an investment in the AOP. Rather, the aforesaid interest expenditure pertains to the capital which was borrowed by the assessee for an investment in the property, the rental income of which only pursuant to a pending litigation amongst the members of the Dhanwatay family before the Hon‟ble High Court, was deposited in the bank account standing in the name of M/s M.D. Dhanwatay and others, AOP - the aforesaid interest expenditure pertaining to the funds which were utilized by the assessee in respect of Dhanwatay House property, cannot be placed at par with the interest on capital which was borrowed by the assessee for the purpose of making an investment in the AOP - in terms of our aforesaid observations are persuaded to subscribe of the view taken by the CIT(A) who in our considered view had rightly concluded that the share of profit in the form of rent received by the assessee was liable to be taxed under the “Income from house property”, and the assesses would be eligible to claim deduction of the interest expenditure against the said income, though with a rider that such deduction was not to exceed the share of income of the assessee as a member of the AOP. - Decided against revenue
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