Income from House Property: ITAT Admits Additional Evidence, Remits Interest Deduction Claim to AO [Read Order]

The assessee Shobha Sundar Babu filed her return of income for the assessment year 2018-19 on 24.7.2018, declaring a total income of Rs. NIL. Subsequently, the case of the assessee was

selected for complete scrutiny on the issue of “income from house property”.

Consequently, notices were issued, and the assessee had made part submissions. On perusal of the ITR filed by the assessee, the AO found that the assessee has claimed interest expense of Rs.. 53,09,817/-under the head of House property.

The assessee, during the course of assessment proceedings, submitted a copy of the order of the Debt Recovery Tribunal only. The AO believed that the assessee failed to provide any details like Date, amount of loan taken and whether the borrowed capital was used for acquiring, constructing, repairing, renewing or reconstructing the property. Further, the AO believed that no deduction under Section 24(b) can be availed if the assessee failed to furnish such certificate as prescribed in the proviso to section 24(b) of the Act.

Since the assessee had submitted only a copy of the Debt Recovery Tribunal’s order and did not furnish the certificate from the person to whom any interest is payable on the capital borrowed and hence the entire interest expense of Rs . 53,09,817/- under the head “income from house property” by the assessee was disallowed under Section 24(b) of the Act. The AO accordingly completed the assessment on a total income of Rs . 1,536/- after setting off the carry forward of loss for the assessment year 2018-19 amounting to Rs . 53,08,281/-.

Aggrieved by the assessment completed, the assessee preferred an appeal before the

CIT(A). The ld. CIT(A) dismissed the appeal of the assessee as, despite providing 6 nos. of opportunities, the assessee neither responded to any of the notices nor filed any detailed

submission to substantiate her claim. Aggrieved by the order of CIT(A), the assessee filed an appeal before the ITAT.

The assessee submitted that the assessee, by way of additional evidence, had submitted the

Sanction letters issued by ING Vysya Bank for the sanction of the loan, the assignment agreement between ING Vysya Bank Ltd and M/s Phoenix ARC Pvt. Ltd.

Further, the assessee submitted that since the assessee was not in possession of these documents before the direction issued by the Hon’ble Karnataka High Court, the same could not be furnished before the AO as well as before the CIT(A).

The Tribunal opined that it was an undisputed fact that the case of the assessee was selected on the issue of “income from house property”. It is also an undisputed fact that the assessee had claimed deduction of Rs 53,09,817/- under Section 24(b) of the Act.

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It is also an undisputed fact that during the course of assessment proceedings the assessee could not produce the certificate from the person to whom any interest is payable on the capital borrowed.

The two member bench comprising Waseem Ahmed (Accountant Member) and Keshav Dubey

(Judicial Member) observed that these additional evidences were filed for the first time before the Tribunal, and the AO had no occasion to examine these additional evidences.

The Tribunal held to remit the issue in dispute to the AO to examine & consider the additional evidence produced before us & decide in accordance with the law.

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