Case Law Details
Indraprastha Shelters Pvt. Ltd. Vs DCIT (ITAT Bangalore)
With regard to the other reason given by the revenue authorities for denying deduction of interest paid to Mrs.Kaveri bai is by applying the 3rd proviso to Sec.24(b) of the Act. On perusal of the provisions of section 24(b), it is clear that the deduction is allowed on account of interest paid on any borrowed capital which is used for the purpose of acquiring, constructing, repairing, renewing or reconstructing of property. The expression used in Sec.24(b) is ‘property’ and not residential or commercial property. Therefore, irrespective of the nature of the property whether it is residential or commercial, deduction has to be allowed under section 24(b) of the Act. As far as the 3rd proviso to section 24(b) of the Act is concerned, all the provisos to Sec.24(b) of the Act deal with property referred to in section 23(2) of the Act which refers to a residential property. The proviso only carves out an exception to section 24(b) of the Act, in so far as it relates to property used for residential purposes and does not deal with or curtail the right of an assessee to get deduction on interest paid on loans borrowed for the purpose of constructing commercial property. Both the AO and CIT(A), in our view, fail into an error in applying the 3rd proviso to section 24(b) of the Act to the case of the assessee.
None of the reasons assigned by the revenue authorities for denying the claim of the Assessee for deduction of interest paid to Mrs.Kaveri Bai, while computing income under the head income from house property can be sustained. We, therefore, direct that the deduction claimed by the assessee should be allowed.
FULL TEXT OF THE ITAT JUDGEMENT
This is an appeal by the assessee against the order dated 23.10.2019 of CIT(A)-3, Bangalore, relating to Assessment Year 2011-12.
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