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2023 (2) TMI 52 - AT - Income TaxTaxability of rental income - CIT-A held income of the appellant is chargeable under the head “Income from Profits and Gains of Business and Profession” as against the income offered to tax under the head “Income from House Property” by the appellant - Deduction of Interest paid on loan to acquire the property - disallowance u/s. 40(a)(ia) HELD THAT:- The undisputed fact is that the ratio laid down in the case of Chennai Properties and Investments [2015 (5) TMI 46 - SUPREME COURT] squarely apply on the facts of the case, therefore, there is no error or infirmity in the decision of the CIT(A) wherein rental income has been taxed under the head profits and gains of business or profession. Once the income has been held to be taxed under the head profits and gains of business or profession the same has to be computed as per the provision of section 28 to section 43D of the Act and to this extent also there is no infirmity in the directions of the CIT(A). Once the assessee has filed form 26A in respect of the interest payment the same has to be considered in the light of the provisions of section 201 of the Act vis a vis the applicability of the provision of section 40 (a)(ia) of the Act. Accordingly the directions of the CIT(A) are modified and the AO is directed to consider the claim of expenditure in the light of the relevant provisions of the Act after making due verification from the recipients of the interest. With the above modifications the appeal of the assessee is partly allowed.
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