TMI Blog2015 (10) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 1,50,000/- described in second proviso is with reference to the property which is referred in sub-section (2) of section 23. Section 23(2) would be applicable to a house or part of the house which either is in the occupation of the owner for the purpose of his residence or the same is not actually occupied by the owner for the reason that owning to his employment, business or provision carried on at any other place and he is to reside at that other place in building not belonging to him and ALV of such property would be taken as nil. Undisputedly, the flat 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, provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal 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 ₹ 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 properties, one of which is Flat No.101, Marble Arch, Pali Hill, Bandra and the other is 203, Nestle-1, A-Wing, P.B.Marg, Mumbai. Flat at Bandra has been considered to be self occupied prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it was his case that 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the property is wholly unoccupied or, where the property 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (2) Where the property is in the occupation of the owner for the purposes 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-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building not belonging to him and ALV of such property would be taken as nil. Undisputedly, the flat 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 inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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