The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) allowed the deduction under Section 24 of the Income Tax Act, 1961 due to interest expenditure claimed under the head of income from house property in the original return of Income.
The assessee is a full-time employee of Jet Airways India Limited. He filed his original return of income declaring salary income and income from house property. Under the head income from house property, the assessee claimed only interest expenditure of Rs. 1,50,000/- and claimed set off of the same against Salary income.
The return of income has been filed beyond the due date prescribed under Section 139(1) of the Income Tax Act, meaning thereby, it was filed under Section 139(4) of the Income Tax Act as the belated return of income. He then filed a revised return of income wherein he declared rental income and interest income, which were omitted to be declared in the original return of income.
The Assessing Officer did not allow interest expenditure claimed by the assessee while assessing the rental income and interest income declared in the revised return of income. The Commissioner of Income Tax (Appeal) [CIT(A)] confirmed the assessment made by the Assessing Officer and accordingly dismissed the appeal of the assessee.
The Two-member bench comprising of B.R. Baskaran (Accountant member) and Narendra Kumar Choudhry (Judicial member) held that the Assessing Officer was not justified in denying deduction of interest expenditure claimed under Section 24 of the Income Tax Act.
The Assessing Officer has taken into account only income that was omitted but failed to allow deduction of interest expenditure. The bench held that he should have deducted the correct amount of interest expenditure also while determining income under the “house property”. Therefore, the order passed by the CIT(A) was set aside and the issue was restored back to the file of the Assessing Officer. Thus, the appeal of the assessee was allowed.
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