Amortization of expenses on cost of Building Construction on Leasehold Land not Deductible from House Property Income: ITAT [Read Order]

The Bengaluru bench of the Income Tax Appellate Tribunal ( ITAT ), in a recent ruling held that the amount of amortization of cost of construction of building on leased land cannot be deducted from the head “Income from House property” since the same is not permissible under section 24 of the Income Tax Act, 1961.

During the relevant assessment year, the assessee claimed deduction in respect of the amortization of the cost of construction of building on leased land from the house property income. However, the Assessing Officer rejected the claim and held that such a deduction cannot be made under section 24 of the Income Tax Act.

Before the Tribunal, the assessee contended that both the issues noted above are covered against the assessee in its own case by the decision of the co-ordinate Bench of the Tribunal concerning the assessment year 2007- 08.

It was held that no deduction is allowable under section 23 & 24 of the Income Tax Act about the cost of the building let out even if constructed on leasehold land and for computing annual rent under sections 22 & 23. The Tribunal, in the said order, pointed out that “what is relevant is the amount of rent received or receivable and there is no scope of any deduction on account of diversion of a portion of income at source, we hold that this claim of the assessee is not allowable.”

The Tribunal, based on the above decision, has held that “since the matter has also been decided against the assessee by the co-ordinate Bench on the ground that amortization of expenses on cost of construction of building on leasehold land is not a permissible deduction under sec.24 of the IT Act in the facts of the case. In parity, issue no. 2 of the assessee’s appeal is rejected.”