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2016 (3) TMI 241 - ITAT JAIPUR

2016 (3) TMI 241 - ITAT JAIPUR - TMI - Disallowance of interest on borrowed capital u/s 24(b) - whether property should be let out for claiming deduction of interest? - Held that:- It is evident from the record that the assessee did not offer the amount of rent for which IT is reasonably accepted to let in terms of Section 23(1) of the Act. Besides the assessee has claimed depreciation thereon on the property without using the said flat B-2. Thus the assessee has unjustifiably claimed deduction .....

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ied with any of these statutory conditions, the lower authorities have rightly disallowed the proportionate interest wrongly claimed by the assessee as allowable. - Decided against assessee - ITA No. 965/JP/2013 - Dated:- 27-1-2016 - SHRI R.P. TOLANI, JUDICIAL MEMBER For The Assessee : Shri Rajeev Sogani, CA For The Revenue : Shri Rajinder Singh, JCIT- DR ORDER PER R.P. TOLANI, JM This is an appeal filed by the assessee against the order of the ld. CIT(A)-II, Jaipur dated 24-07-2013 for the asse .....

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n of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the order being illegal and without authority of law. 2.1 During the course of hearing, it is found that the assessee has filed the appeal late by 50 days. The application for condonation of delay has been filed by the assessee contending that assessee's computer and software s were seized by M/s. Adobe Systems Indian (P) Ltd. due to which the appeal was filed la .....

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he case are that the assessee purchased two flats at Mall Shree Residency, Plot No.29, Mission Compound, Ajmer Road, Jaipur for a total consideration of ₹ 54,86,020/- on which a housing loan of ₹ 40.50 lacs from India Bulls Financing Ltd. The assessee let out flat No. G-102 situated at Ground Floor but Flat No. B-2 situated at basement could not be let out. The assessee while furnishing the income from house property claimed deduction of interest on the entire housing loan. The AO he .....

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ssee made all the efforts to let out Flat B-2 and even did not use it for its own business (iv) No tax can be levied on notional income The assessee relied on following judgements before the ld. CIT(A). (i) Premsudha Exports (P) Ltd. vs. ACIT 110 ITD 158 (Mum.) (ii) DLF Office Developers vs. ACIT 23 SOT 19 (Del) However, the ld. CIT(A) confirmed the following observations of ld. AO in this behalf :- …….Further during the year under review the assessee has given only one flat on ren .....

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8377; 5,52,316/- & total area of 2100 sq.ft ) and the remaining sum of ₹ 2,23,556/-(Rs. 5,52,316/- ₹ 3,28,760) is disallowed and added back to the total income of the assessee. In view of the facts discussed above, it is clear that the assessee has claimed excess deduction towards payment of interest under the head of Income from House Property, therefore, a total of ₹ 3,06,158/- (Rs. 82,602+Rs. 2,23,556/-) is disallowed and added back to the total income of the assessee. 4 .....

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ed depreciation on these flats under the head income from business. As these flats are not used for business purposes, therefore, depreciation on the said flats is not allowable as deduction under the head income from business. Hence, the depreciation claimed on these flats at ₹ 2,74,301/- is thus disallowed and added back to the total income of the assessee. This would result in an addition of ₹ 2,74,301/- 3.3 Aggrieved, the assessee is before ITAT, ld. Counsel for the assessee cont .....

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as the annual value. The effect of substitution of Section 23 has been elaborately dealt with in Departmental Circular No.14 of 2001 (2001) 252 ITR (St.) 65, 89 wherein it has been stated that where the property or any part is vacant for the whole of the year and the actual rent received or receivable is less than the annual letting value, the sum received or receivable is less than the annual letting value, the sum received or receivable shall be the annual value. Since all the conditions ment .....

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