AI Drafter 
TaxTMI 
TaxTMI 
2016 (7) TMI 1015
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....2009 declaring total income at Rs. 2,87,580/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Act was issued on 31.8.2009 which was duly served upon the assessee. On scrutiny of the accounts, it revealed that the assessee has taken loan from ICICI Bank. It has claimed deduction of interest expenditure of Rs. 1,24,952/- in the capital account for the period ending on 31.3.2008. The ld.AO has directed the assessee to explain as to how it is admissible to the assessee. In response to the query of AO, the assessee has filed written submission. It reads as under: " During the previous year a residential property known as Bunglow No2- Deep Mangal Society, Athwaline, Surat has been purchased....
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....fits of which are chargeable to income-tax, shall be chargeable to income-tax under the head "Income from house property". Section 23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be- (a) the sum for which the property might reasonably be expected to let from year to year; or (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or (c) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by th....
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....ere the property referred to in sub-section (2) consists of more than one house- (a) the provisions of that sub-section shall apply only in respect of one of such houses, which the assessee may, at his option, specify in this behalf; (b) the annual value of the house or houses, other than the house in respect of which the assessee has exercised an option under clause (a), shall be determined under sub-section (1) as if such house or houses had been let. Section 24. Income chargeable under the head "Income from house property" shall be computed after making the following deductions, namely:- (a) a sum equal to thirty per cent of the annual value; (b) where the property has been acquired, constructed, repaired, rene....
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.... capital borrowed which remains to be repaid as a new loan. Explanation.-For the purposes of this proviso, the expression "new loan" means the whole or any part of a loan taken by the assessee subsequent to the capital borrowed, for the purpose of repayment of such capital. 7. The assessee has placed on record computation of income on page no.14 of the paper book. The relevant part of the computation reads as under: STATEMENT OF TOTAL INCME INCOME FROM HOUSE PROPERTY: Rental Income from Shop of Shivalik Heights 45000 Less: Standard deduction 13500 31500 Net Annual Value of Deep Mangal Bungalow NIL Less: Interest on capital borrowed from ICICI Bank ....
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.... proviso he could claim deduction to the extent of Rs. 30,000/-, and if it establishes fulfillment of conditions provided in second proviso, then to the extent of Rs. 2.00 lakhs. The assessee has to prove that this bungalow was purchased with borrowed funds. But neither the bungalow was ready for self-occupation nor the assessee has given a choice. Thus, under this head also the assessee is not entitled for deduction of an interest expenditure. In view of the above discussion, I am of the view that under both the fold of propositions, the assessee is not entitled for the deduction of interest expenditure. 9. In the next ground of appeal, the grievance of the assessee is that the ld.CIT(A) has erred in confirming the adhoc disallowance of....