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TMI Blog2023 (10) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... to section 24 is applicable only on self-occupied house property and not on let-out property and therefore the same should be fully allowed as deduction from "Income from House Property" Tax effect Rs. 8,02457. 3. That the Ld. CIT(A) has grossly erred in law and on facts in disallowance of interest paid on housing loan (borrowed capital) without considering the detailed documents submitted during the course of assessment and appeal proceedings, the same needs to be fully allowed. Tax effect is Rs. 1,78,52,568. 4. (i) That the Ld. CIT(A) has grossly erred in "enhancement of income" without issuing a show cause notice in view of the provisions of section 251(2) of the I. Tax Act stating that this is the case of enhancement of income not enhancement of assessment, such an addition to income is illegal, void ab intio and needs to be deleted. (ii) That the Ld. CIT (Appeals) has grossly erred in adding a Notional Interest on an Interest Free Refundable Security Deposit ignoring the provisions of section 23 and various court decisions on identical facts of the case of the assessee, relying on certain court decisions where the facts are entirely different from the facts of the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. 6. The ld. Counsel for the assessee submits that the assessee has claimed deduction for interest of Rs. 7,08,02,251/- under the head income from house property on borrowed capital of Rs. 100 crores from Axis Bank for the purchase of property. The ld. Counsel submits that copy of statement of account of Axis Bank disbursing the loan amount is placed at page No. 63 of the paper book. The ld. Counsel also submits that repayment of schedule of loan interest charged on loan is placed at page No. 65 and 66 of the paper book. The ld. Counsel also submits that the loan which was taken from Axis Bank was subsequently shifted to Punjab National Bank on 2.11.2017 and a copy of loan account statement and certificate from Punjab National Bank certifying the purpose of obtaining the loan are placed at page Nos. 71 to 73 of the paper book. The ld. Counsel submits that the break-up of interest on borrowed capital of Rs. 7,08,02,251/- paid to the banks are shown at page No. 61 of the paper book. Therefore, the ld. Counsel submits that in view of the above evidences there is no justification in not allowing the interest paid on housing loan borrowed for purchase of the property, which was l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Para 9. Section 23(1)(a) is relevant for determining the income from house property and concerns determination of the annual letting value of such property. That provision talks of the sum for which the property might reasonably be expected to let from year to year. This contemplates the possible rent that the property might fetch and not certainly the interest in fixed deposit that may be placed by the tenant with the landlord in connection with the letting out of such property. It must be remembered that in a taxing statute it would be unsafe for the Court to go beyond the letter of the law and try to read into the provision more than what is already provided for. The attempt by learned counsel for the revenue to draw an analogy from the Wealth-tax Act, 1957 is also to no avail. It is an admitted position that there is a specific provision in the Wealth-tax Act which provides for considering of a notional interest whereas section 23(1)(a) contains no such specific provision. " 11. We also observe that the Hon'ble Delhi High Court in the case of CIT Vs. Moni Kumar Subba (supra) held as under:- "10. This view of the Calcutta High Court has been accepted by a Division Bench of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(a) contains no such specific provision." We approve the aforesaid view of the Division Bench of this Court and Operative words in Section 23 (1)(a) of the Act are "the sum for which the property might reasonably be expected to let from year to year". These words provide a specific direction to the Revenue for determining the "fair rent". The AO, having regard to the aforesaid provision is expected to make an inquiry as to what would be the possible rent that the property might fetch. Thus, if he finds that the actual rent received is less than the "fair/market rent" because of the reason that the assessee has received abnormally high interest free security deposit and because of that ITA No.499 of 2008 with ITA No.803 of 2007, ITA No.1113 of 2008, ITA No.388 of 2010, reason, the actual rent received is less than the rent which the property might fetch, he can undertake necessary exercise in that behalf. However, by no stretch of imagination, the notional interest on the interest free security can be taken as determinative factor to arrive at a "fair rent". Provisions of Section 23(1)(a) do not mandate this. The Division Bench in Asian Hotels Limited (supra), thus, rightly obs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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