Shobha Sundar Babu Vs ITO (ITAT Bangalore)
The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, in the case of Shobha Sundar Babu vs. Income Tax Officer (ITO), partially allowed the assessee’s appeal for statistical purposes. The core issue involved the disallowance of a significant deduction claimed under Section of the Income Tax Act, 1961, related to interest on borrowed capital for a house property.
Background and Initial Disallowance
The appeal concerned the Assessment Year (A.Y.) 2018-19. The assessee, Shobha Sundar Babu, had filed a return declaring total income, subsequently selected for scrutiny on the issue of “income from house property.”
During the assessment proceedings, the Assessing Officer (AO) noted that the assessee had claimed an interest expense deduction of under Section for a property in Bangalore.
Reason for Disallowance
The AO observed that:
- The assessee only submitted a copy of an order from the Debt Recovery Tribunal (DRT), but failed to furnish crucial details.
- Crucial details missing included the date and amount of the loan, and evidence confirming the capital was used for acquiring, constructing, repairing, renewing, or reconstructing the property.
- Critically, the assessee did not furnish the prescribed certificate from the lender, as required by the proviso to Section of the Act, which certifies the interest payable on borrowed capital.
- Based on this non-compliance, the AO held that no deduction under Section could be allowed. Consequently, the entire interest expense of was disallowed, and the assessment was completed on a positive income after setting off carry forward losses.
First Appellate Stage
