Assessee's Appeal Partially Allowed on Interest Deduction for Second Property

The Tribunal partially allowed the appeal filed by the assessee, specifically on the issue of the allowance of full interest paid for the second property. The decision was pronounced in the open court on September 16, 2014.

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Issues:
1. Computation of income from second property based on Municipal Rateable Value.
2. Allowance of full interest paid for the second property.

Analysis:
Issue 1: Computation of income from second property based on Municipal Rateable Value
The appellant challenged the decision of the Ld. CIT(A)-3 for not directing the Assessing Officer (AO) to adopt the Municipal Rateable Value for computing income from the second property, which was acquired during the year and remained idle. The appellant sought the adoption of Municipal Rateable Value based on a decision of the jurisdictional Bombay High Court. However, the appellant did not press this ground before the Tribunal, leading to its dismissal.

Issue 2: Allowance of full interest paid for the second property
The AO had restricted the deduction of interest paid by the assessee for the second property to a sum of Rs. 1,40,193, citing the second proviso to section 24 of the Income Tax Act, 1961. The appellant contended that the restriction of Rs. 1,50,000 under section 24(b) applied only to properties falling under section 23(2), which, in this case, was the Flat at Bandra. The appellant argued that there was no limit for the allowance of interest under section 24(b) for the Nestle Property. The Tribunal agreed with the appellant's interpretation, noting that the interest paid for the Nestle Property could not be restricted to an amount less than the actual interest paid by the assessee. Consequently, the Tribunal allowed the appellant's appeal on this ground, directing the AO to allow the full deduction of interest paid, amounting to Rs. 3,50,641.

In conclusion, the Tribunal partially allowed the appeal filed by the assessee, specifically on the issue of the allowance of full interest paid for the second property. The decision was pronounced in the open court on September 16, 2014.

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