TMI Blog1997 (8) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... ingh Ahluwalia, purchased one commercial site No. 461-462, Sector 35-C, Chandigarh in open auction held on 13-3-1988 for a sum of Rs. 21,32,000,99 years lease-hold basis. As per the allotment letter issued by the Estate Officer, Chandigarh, the purchasers were required to deposit 25 per cent of the consideration at the time of auction. The remaining amount was payable by the allottees within 30 days and no interest was payable on this payment. Alternatively, as per clause 5 of the allotment letter, the balance amount can be paid in three equal yearly instalments along with interest at 7 per cent per annum. Before the Assessing Officer, the assessee claimed that the interest paid on instalments was interest on borrowed capital and as such, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of interest paid to the estate officer on the balance instalments in relation to the property whose income is being offered by the assessee for taxation under the head 'Income from house property'. It was submitted that, however, the CIT(Appeals) in assessee's own case for assessment year 1992-93 has adjudicated this issue in favour of the assessee and has allowed deduction of similar amount of interest in the assessment year 1992-93. Shri Jain referred to the definition of interest given in section 2(28A) and submitted that in the definition it is mentioned 'interest' means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "24(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 deductions, namely :----- (vi) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital." Shri Jain submitted that the word used is capital borrowed and not money borrowed and capital is a much wider term than money. Shri Jain then referred to the meaning assigned to the word "capital" in the Oxford Dictionary, Webster New 20th Century Dictionary and Law Lexicon and also the decision of the Hon'ble Supreme Court in the case of Lohia Machines Ltd. v. Union of India [1985] 152 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he EO are treated as debts incurred and allowed as a deduction from fair market value of the property to arrive at the value liable to wealth-tax. Accordingly, it was pleaded that the learned DCIT(Appeals) was not justified in denying the claim of deduction amounting to Rs. 66,667 on account of interest payable by the assessee to the EO, particularly when no such disallowance was made in the case of other two co-owners and also the fact that the CIT(Appeals) in the case of the assessee for the assessment year 1992-93 had allowed relief to the assessee. Reliance was also placed on the decision of the Hon'ble Supreme Court in the case of Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1/ 3 Taxman 69. 6. Smt. Parneet Mahal, the learned DR. on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onth in which it falls due or such extended period as may be allowed by the Estate Officer but not exceeding three months in all from the date on which the instalment was originally due, the Estate Officer, may issue a notice to the lessee calling upon him to show cause as to why the lease may not be cancelled and the site resumed and the amount already paid forfeited to the Government." Clause 8A is to the following effect :--- " After considering the cause, if any, shown by the lessee in pursuance of the aforesaid notice, the Estate Officer may either allow payment of instalment/rent with penalty which may extend to 100 per cent of the amount due and interest @ 12 per cent p.a., for the delayed period, order cancellation of lease and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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