Arunaben D.Patel, Baroda v. The ACIT.,Circle-2,, Baroda

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER DATE OF HEARING : 26.04.10 DRAFTED ON: 26.04.1 0 ITA NO.172/AHD/2008 ASSESSMENT YEAR : 2004-2005 SMT. ARUNABEN D.PATEL. 901 ARUNDEEP COMPLEX RACE COURSE CIRCLE VADODARA. VS. THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-2 VADODARA. PAN/GIR NO. : ACPPP3005R (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI SUNIL TALATI A.R. RESPONDENT BY: SHRI C.K.MISHRA. SR. D.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-II BAR ODA DATED 08.11.2007. 2. GROUNDS OF THE APPEAL READS AS UNDER:- 1. THE ADDITIONS & DISALLOWANCES CONFIRMED PASSED BY THE LEARNED CIT(A) ARE BAD IN LAW CONTRARY TO LEGAL PRONOUNCEMENTS AND SAME BE QUASHED. THE ADDITIONS/DISALLOWANCES MADE ARE UNWARRANTED AND UN CALLED FOR. IT BE HELD SO NOW AND RETURNED INCOME BE ACCEP TED NOW. 3. THIS GROUND OF APPEAL IS GENERAL IN NATURE AND REQUIRES NO SEPARATE ADJUDICATION BY US. - 2 - 4. GROUND NO.2 AND 3 OF THE APPEAL ARE AS FOLLOWS: - 2. THE LEARNED CIT(A)II BARODA HAS ERRED IN CONFI RMING THE DISALLOWANCE OF INTEREST OF RS.12 78 474/- (INCLUDI NG INTEREST TO M/S.DHARA DEVELOPERS OF RS.2 93 838 ON MAINTENAN CE DEPOSIT) CLAIMED BY YOUR APPELLANT AS DEDUCTION FRO M RENTAL INCOME. IT IS SUBMITTED THAT DISALLOWANCE MADE BY AO IS UNCALLED FOR AND UNWARRANTED. IT BE HELD SO NOW AND INTEREST CLAIMED BE ALLOWED AS DEDUCTION FROM RENTAL INCOME. 3. THE LEARNED CIT(A)II BARODA HAS ERRED IN CONFIR MING DISALLOWANCE OF INTEREST OF RS.4 89 974 CLAIMED BY YOUR APPELLANT AS DEDUCTION FROM INTEREST EARNED. IT IS SUBMITTED THAT DISALLOWANCE MADE BY AO IS UNCALLED FOR AND UNWARRANTED. IT BE HELD SO NOW AND INTEREST CLAIMED BE ALLOWED AS DEDUCTION FROM INTEREST INCOME. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. IN THE INSTANT CASE THE ASSESSEE HAS PAID INTEREST OF RS. 17 68 448/- TO THE FOLLOWING PARTIES:- NAME AMOUNTS UTI BANK (RS.12 96 233 + RS. 18 093) RS.13 14 326/ - SBI RS. 1 44 884/- BANK CHARGES RS. 774/- DHARA DEVELOPERS (MAINTENANCE DEPOSIT) RS. 2 92 838 /- INDUBEN PATEL RS. 4 063/- MAHENDRA PATEL RS. 7 500/- TOTAL RS.17 68 448/- THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.4 89 974/- OUT OF THE ABOVE RS.17 68 448/- AS DEDUCTION FROM THE INTEREST INCOM E EARNED FROM M/S. KHURANA CONSTRUCTIONS WHERE THE ASSESSEE IS A PARTN ER AND CLAIMED THE BALANCE AMOUNT OF RS.12 78 474/- AS DEDUCTION FROM INCOME FROM HOUSE PROPERTY. THE ABOVE CLAIM OF THE INTEREST WAS DISA LLOWED BY THE LEARNED - 3 - ASSESSING OFFICER ON THE GROUND THAT THE LOAN TAKEN FROM UTI BANK AND STATE BANK WERE NOT UTILISED FOR THE CONSTRUCTION O R RENOVATION OF HOUSE PROPERTY BUT WERE UTILISED FOR RETIRING PERSONAL LI ABILITIES AND RESTRUCTURING OF BUSINESS FINANCE OVERDRAFT AGAINST FIXED DEPOSI TS (PERSONAL) ETC. . THE LEARNED ASSESSING OFFICER ALSO OBSERVED THAT THE AS SESSEE COULD NOT ESTABLISHED NEXUS BETWEEN INVESTMENT IN M/S.KHURANA CONSTRUCTION AND THE BORROWED FUNDS. 6. IN APPEAL THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE ACTION OF THE LEARNED AS SESSING OFFICER OF DISALLOWING INTEREST EXPENDITURE OF RS.4 89 974/- A ND RS.12 78 474/-. 7. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE SUBMITTED THAT LOANS ON WHICH INTEREST WAS PAID WAS NOT BORROWED DURING THE YEAR UNDER CONSIDERATION BUT ARE BROUGHT FORWAR D BALANCES FROM EARLIER YEARS. THE INTEREST EXPENDITURE IN EARLIER YEARS WA S DULY ALLOWED AS DEDUCTION FROM RENTAL INCOME. HE ALSO POINTED OUT THAT SUCH INTEREST EXPENDITURE WAS ALSO ALLOWED AS DEDUCTION IN THE AS SESSMENT OF SUBSEQUENT YEARS INCLUDING ASSESSMENT OF ASSESSMENT YEAR 2006-2007 WHICH WAS MADE UNDER SECTION 143(3) OF THE ACT. IN SUPPORT OF THE ABOVE EXPLANATION THE ASSESSEE PLACED AT PAGE NO.1 TO 30 OF THE PAPER BOOK COPY OF INTIMATION /ASSESSMENT ORDER COMPUTATION O F TAXABLE INCOME AND DETAILS OF INTEREST ACCOUNT. THE LEARNED AUTHORISE D REPRESENTATIVE OF THE ASSESSEE ALSO EXPLAINED THAT THE LOANS BORROWED WER E UTILIZED FOR REPAYMENT OF OLD LOANS TAKEN FOR CONSTRUCTION OF HO USE PROPERTY AND PART OF THE BORROWED LOAN WAS UTILISED FOR MAKING INVEST MENT IN PARTNERSHIP FIRM MS/KHURANA CONSTRUCTIONS WHEREIN THE ASSESSEE WAS A PARTNER. THE ABOVE FACTS WERE ACCEPTED BY THE DEPARTMENT IN THE EARLIER YEARS AND DEDUCTION FOR INTEREST EXPENDITURE WAS DULY ALLOWED . NO MATERIAL WAS - 4 - BROUGHT ON RECORD BY THE REVENUE WHICH MAY ENABLE T HE LEARNED ASSESSING OFFICER TO CHANGE THE ACCEPTED POSITION O F EARLIER YEAR AND TAKE A DIFFERENT STAND. HE ALSO POINTED OUT THAT THE LOW ER AUTHORITIES WERE NOT JUSTIFIED IN OBSERVING THAT FROM THE PARTNERSHIP FI RM NO TAXABLE INCOME WAS DERIVED FROM AS INTEREST INCOME DERIVED FROM M/ S.KHURANA CONSTRUCTION WAS TAXABLE IN THE HANDS OF THE ASSESS EE. 8. WE FIND THAT THE LEARNED DEPARTMENTAL REPRESENT ATIVE COULD NOT CONTROVERT THE ABOVE SUBMISSION OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE. WE FIND THAT INTER EST EXPENDITURE CLAIMED AGAINST RENTAL INCOME WAS DULY ALLOWED TO THE ASSES SEE IN THE ASSESSMENT OF EARLIER YEAR. ON VERIFICATION OF ORDER AND COPY OF FINANCIAL STATEMENTS WE FIND THAT IN SUBSEQUENT YEAR ALSO THE ASSESSEE C LAIMED DEDUCTION OF PART OF INTEREST EXPENSES AGAINST RENTAL INCOME AND THIS CLAIM OF THE ASSESSEE WAS DULY ALLOWED IN THE ASSESSMENT. IT IS OBSERVED THAT A PART OF INTEREST EXPENSES WAS NOT CLAIMED BY THE ASSESSEE A S DEDUCTION AND THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE EXPLAINED THAT AS PART OF THE HOUSE PROPERTY WAS VACANT IN SUBSEQUENT YEAR AND THEREFORE INTEREST EXPENSES RELATING TO THAT PART OF THE HOUS E PROPERTY WAS NOT CLAIMED AS DEDUCTION BY THE ASSESSEE. THUS WE FIND THAT INTEREST EXPENSES CLAIMED BY THE ASSESSEE AGAINST RENTAL INCOME WAS D ULY ALLOWED TO HER IN THE ASSESSMENT OF EARLIER YEAR AS WELL AS IN THE AS SESSMENT OF SUBSEQUENT YEAR. WE THEREFORE FIND THAT THERE IS NOT MATERIAL AVAILABLE ON RECORD TO CONTROVERT THE EXPLANATION OF THE ASSESSEE THAT THE AMOUNT BORROWED IN RESPECT OF WHICH INTEREST WAS CLAIMED AS DEDUCTION FROM RENTAL INCOME WERE UTILIZED FOR REPAYING EARLIER YEAR LOANS TAKEN FOR CONSTRUCTION OF HOUSE PROPERTY AND THEREFORE SUCH INTEREST EXPENSE S ARE ALLOWED AGAINST RENTAL INCOME OF THE YEAR UNDER CONSIDERATION. IN V IEW OF THE ABOVE WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON TH IS PART OF THE ISSUE AND - 5 - DIRECT THE LEARNED ASSESSING OFFICER TO ALLOW DEDUC TION OF RS.12 78 474/- CLAIMED BY THE ASSESSEE AGAINST RENTAL INCOME. IN R ESPECT OF INTEREST EXPENSES OF RS.4 89 974/- THE DISALLOWANCE WAS MAD E BY THE LOWER AUTHORITIES ON TWO GROUNDS I.E. (1) NO TAXABLE INCO ME WAS DERIVED FROM THE PARTNERSHIP FIRM AND THEREFORE INTEREST EXPENS ES WERE NOT ALLOWABLE IN VIEW OF PROVISIONS OF SECTION 14A OF THE ACT (2) NO NEXUS BETWEEN BORROWED FUNDS AND INVESTMENT WITH M/S.KHURANA CONS TRUCTIONS WAS ESTABLISHED. WE FIND THAT THE FIRST GROUND STATED B Y THE LOWER AUTHORITIES IS NOT FACTUALLY CORRECT AND THE ASSESSEE HAS OFFERED INTEREST INCOME OF RS.4 89 974/- DERIVED FROM M/S. KHURANA CONSTRUCTIO NS FOR TAXATION. HOWEVER WE FIND THAT THE ASSESSEE HAS BROUGHT NO M ATERIAL BEFORE US ALSO TO ESTABLISH NEXUS BETWEEN THE BORROWED FUNDS AND I NVESTMENT MADE IN M/S. KHURANA CONSTRUCTIONS. WE FIND THAT IT IS NOT THE CASE OF THE ASSESSEE THAT SUCH INTEREST EXPENSES ALREADY STANDS ALLOWED TO THE ASSESSEE IN EARLIER YEAR BY THE DEPARTMENT OR IN SUBSEQUENT YEA R TO SHOW THAT THE NEXUS STANDS ACCEPTED BY THE DEPARTMENT. IN THE ABO VE CIRCUMSTANCES AS THE ASSESSEE COULD NOT ESTABLISHED ANY NEXUS BETWEE N BORROWED FUNDS ON WHICH INTEREST WAS PAID AND THE INVESTMENT WITH M/S .KHURANA CONSTRUCTIONS ON WHICH INTEREST INCOME WAS EARNED WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDERS OF THE LOW ER AUTHORITIES DISALLOWING CLAIM OF SUCH INTEREST EXPENDITURE OF R S.4 89 974/-. THUS THIS ISSUE STANDS DECIDED AGAINST THE ASSESSEE. THE REFORE THE GROUND IN RESPECT OF DISALLOWANCE OF INTEREST OF RS.12 78 474 /- AS DEDUCTION FROM INCOME OF HOUSE PROPERTY IS ALLOWED AND THE GROUND OF DISALLOWANCE OF INTEREST EXPENSES OF RS.4 89 974/- AGAINST THE INT EREST INCOME EARNED FROM M/S.KHURANA CONSTRUCTIONS IS DISMISSED. 9. GROUND NO.4 OF THE APPEAL READS AS UNDER:- - 6 - 4. THE LEARNED CIT(A)II BARODA HAS ERRED IN CONFI RMING RENTAL INCOME OF RS.13 84 635 AND RS.30 00 000 AS INCOME FROM OTHER SOURCES AND IN TURN DENYING DEDUCTION @ 30% CLAIMED BY YOUR APPELLANT FROM RENTAL INCOME. IT IS SUBMITT ED THAT INCOME EARNED BE TREATED AS RENTAL INCOME. IT IS SUBMITTED THAT INCOME EARNED BE TREATED AS RENTAL INCOME AN D DEDUCTION @30% BE ALLOWED AS CLAIMED BY YOUR APPELL ANT. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. THE GROUND OF APPEAL TAKEN BY THE ASSESSEE RELATES TO TWO ISSU ES FIRSTLY RS.13 84 635/- RECEIVED BY THE ASSESSEE UNDER THE HEAD SERVICE CHA RGES FROM FOUR DIFFERENT PARTIES AND SECONDLY RS.30 00 000/- RECEI VED FROM UTI BANK LTD. ON PREMATURE TERMINATION OF LEASE AGREEMENT. 11. IN RESPECT OF THE FIRST ISSUE THE RELEVANT FA CTS ARE THAT THE ASSESSEE HAS RECEIVED SERVICE CHARGES FROM THE FOLL OWING PARTIES:- SR. NO. NAME OF THE COMPANY AMOUNT SERVICE CHARGES 1 HERO HONDA MOTORS LIMITED 3 63 000.00 2 TATA HONEYWELL LIMITED 5 18 556.00 3 GLOBAL ELEC. COMM. SER. LTD. 1 41 720.00 4 UTI BANK LIMITED 3 61 359.00 TOTAL 13 84 635.00 THE ASSESSEE HAS SHOWN THE ABOVE SERVICE CHARGES UN DER THE HEAD INCOME FROM HOUSE PROPERTY AND THEREBY CLAIMED DE DUCTION @ 30% OF THE SAME UNDER SECTION 24(A) OF THE ACT IN COMPUTIN G THE TOTAL INCOME. THE LEARNED ASSESSING OFFICER WAS OF THE VIEW THAT IN TERMS OF THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. MODEL MANUFACTURING CO. LTD. 175 ITR 374 AND CIT VS. MOD EL MANUFACTURING - 7 - PVT. LTD. 159 ITR 270 THE ABOVE SERVICE CHARGES AR E TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AND THEREFORE HE ASSESSED AS SUCH AND THEREBY DISALLOWED THE CLAIM FOR DEDUCTION UNDE R SECTION 24(A) @ 30% ON THE SAME. 12. ON APPEAL THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT THE ABOVE SERVICE CHARGE S RECEIVED BY THE ASSESSEE WAS ON ACCOUNT OF USE OF FURNITURE AND FIX TURES AND NOT FOR USE OF PREMISES. THE LEARNED COMMISSIONER OF INCOME TAX(AP PEALS) THEREFORE CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFIC ER. 13. THE LEARNED AUTHORISED REPRESENTATIVE OF THE A SSESSEE SUBMITTED THAT NO ACTUAL SERVICE WAS RENDERED BY TH E ASSESSEE IN RESPECT OF ABOVE SERVICE CHARGES RECEIVED. HE EXPLAINED THAT T HE CHARGES WERE IN RESPECT OF PREMISES ONLY AND TWO SEPARATE AGREEMENT S WERE EXECUTED BIFURCATING THE AMOUNT OF RENT FOR USE OF PREMISES TO AVOID PROPERTY TAX. 14. WE FIND THAT AT PAGE NO.44 TO 49 OF THE PAPER BOOK FILED BY THE ASSESSEE IS AGREEMENT WITH UTI BANK LIMITED FOR SERVICE CHARGES. A PERUSAL OF PARA NO.4 OF PAGE NO. 4 OF THE AGREEMENT SHOWS THAT SERVICE CHARGES WAS PAID BY THE SAID BANK TO THE ASSESSEE F OR USE OF FIXTURES AND ACCESSORIES. NO COPY OF AGREEMENT IN RESPECT OF RE MAINING THREE PARTIES WERE FILED BEFORE US. WE THUS FIND THAT NO MATERIA L WAS BROUGHT BEFORE US BY THE ASSESSEE TO CONTROVERT THE FINDING O F THE L EARNED COMMISSIONER OF INCOME TAX(APPEALS) THAT THE SERVICES CHARGES WERE RECEIVED IN RESPECT OF USE OF FURNITURE AND FIXTURES PROVIDED BY THE ASSES SEE AND RATHER THE AGREEMENT AT PAGE NO.44 TO 49 OF PAPER BOOK SUPPOR TS THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). WE FIN D THAT NO MATERIAL WAS BROUGHT BEFORE US BY THE ASSESSEE TO SHOW THAT THE AGREEMENT STATED - 8 - ABOVE WAS FALSE AND NO FURNITURE AND FIXTURES WAS P ROVIDED BY THE ASSESSEE. IN THE ABOVE CIRCUMSTANCES WE DO NOT FIN D ANY FORCE IN THE ARGUMENT OF THE ASSESSEE AND AGREE WITH THE VIEW OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). THUS SUCH SE RVICE CHARGES ARE TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SO URCES. THE ASSESSEE HAS NOT POINTED OUT THAT ANY EXPENDITURE WAS ACTUAL LY INCURRED FOR THE EARNING OF THESE SERVICE CHARGES. WE THEREFORE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AU THORITIES IN RESPECT OF THIS PART OF THE GROUND OF APPEAL. 15. THE OTHER PART OF THE GROUND OF APPEAL RELATES TO THE COMPENSATION OF RS.30 00 000/- RECEIVED BY THE ASSE SSEE FROM UTI BANK LTD. FOR EARLY TERMINATION OF LEASE AGREEMENT. THE ASSESSEE CLAIMED THAT AS THE COMPENSATION WAS RECEIVED IN RESPECT OF USE OF HOUSE PROPERTY THE SAME WAS ASSESSABLE UNDER THE HEAD INCOME FROM HOU SE PROPERTY AND THEREFORE DEDUCTION UNDER SECTION 24(A) IS ALLOWAB LE. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AGREED WITH THE FINDINGS OF THE LEARNED ASSESSING OFFICER THAT AMOUNT OF RS.30 LACS WAS RECEIVED BY THE ASSESSEE ON ACCOUNT OF EARLY TERMINATION OF LEASE A GREEMENT AND AS THE COMPENSATION WAS RECEIVED AND NOT FOR THE USE OF TH E PROPERTY SUCH RECEIPT CANNOT BE ASSESSED UNDER THE HEAD INCOME F ROM HOUSE PROPERTY. THEREFORE THE AMOUNT OF RS.30 LACS WAS ASSESSED UN DER THE HEAD INCOME FROM OTHER SOURCES AND THEREBY DEDUCTION UNDER SEC TION 24(A) OF 30% WAS DENIED TO THE ASSESSEE. 16. BEFORE US THE LEARNED AUTHORISED REPRESENTATI VE OF THE ASSESSEE RELIED UPON THE DECISION IN THE CASE OF AC IT VS. RAMA LEASING CO. (P.) LTD. [2008] 20 SOT 505 (MUM) AND IN THE CA SE OF DATAR & CO. VS. ITO [2000] 67 TTJ (PUNE) 546 AND PRAYED FOR ALL OWANCE OF DEDUCTION - 9 - UNDER SECTION 24(A) @ 30%. WE FIND THAT THE TRIBUN AL IN THE CASE OF DATAR & CO. (SUPRA) HAS HELD AS UNDER:- 22. 'IT IS WELL SETTLED LEGAL POSITION THAT INCOME OF THE ASSESSEE HAS TO BE COMPUTED UNDER VARIOUS HEADS SPECIFIED IN CHA PTER IV. IF ANY RECEIPT DOES NOT FALL UNDER ANY SPECIFIC HEAD THEN IT HAS TO BE ASSESSED UNDER THE RESIDUARY HEAD INCOME FROM OTH ER SOURCES BUT IF ANY RECEIPT FALLS UNDER A SPECIFIC HEAD BUT THE SAME CANNOT HE COMPUTED UNDER THAT HEAD THEN IT CAN NOT BE ASSESS ED AS INCOME OF THE ASSESSEE UNDER ANY OTHER HEAD AND WOULD ESCAPE THE TAXATION. THIS PRINCIPLE HAS BEEN LAID DOWN BY THE APEX COURT IN THE CASE OF NALINIKANT AMBALAL MODY VS. S.A.L NARAYAN ROW CIT (1966) 61 ITR 428 (SC) AND WAS APPLIED BY THE BOMBAY HIGH COU RT IN THE CASE OF T.P. SINDHWA (SUPRA). IN THE PRESENT CASE THE COMPENSATION ARISES OUT OF THE AGREEMENT OF LETTING OUT IMMOVABL E PROPERTY AND THEREFORE ASSUMES THE NATURE OF THE INCOME FROM HO USE PROPERTY. THEREFORE IN OUR OPINION SUCH RECEIPT WOULD FALL UNDER THE HEAD INCOME FROM HOUSE PROPERTY . HOWEVER IT IS ONLY ANNUAL VALUE WHICH CAN BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ANY OTHER RECEIPT OTHER THAN THE ANNUAL VALUE CANNOT BE COMPUTED AS INCOME UNDER THIS HEAD. THEREFORE FOLL OWING THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF T. P. SIDHWA (SUPRA) AND THE DECISION OF SUPREME COURT IN THE CA SE OF N.A. MODY (SUPRA) IT IS HELD THAT THE COMPENSATION RECE IVED BY THE ASSESSEE CANNOT BE TAXED.' 17. THE ABOVE DECISION WAS FOLLOWED BY THE TRIBUNA L AGAIN IN THE CASE OF ACIT VS. RAMA LEASING CO. (P.) LTD. [20 08] 20 SOT 505 (MUM). THUS IN VIEW OF THE ABOVE DECISION COMPENS ATION RECEIVED FOR PREMATURE SURRENDER OF LEASE THOUGH REVENUE RECEIPT IS NOT CHARGEABLE TO TAX. HOWEVER IN THE INSTANT CASE THE CLAIM OF THE ASSESSEE IS FOR ALLOWANCE OF DEDUCTION @ 30% UNDER SECTION 24(A) OF THE ACT. THEREFORE IN OUR CONSIDERED OPINION THE LOWER AUTHORITIES WE RE NOT JUSTIFIED IN DISALLOWING THE ABOVE CLAIM. WE THEREFORE SET ASID E THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND DIRECT THE LEAR NED ASSESSING OFFICER TO ALLOW DEDUCTION @ 30% UNDER SECTION 24(A) IN RESPEC T OF ABOVE AMOUNT OF - 10 - RS.30 LACS. THUS THIS GROUND OF APPEAL IN RESPECT OF THE FIRST ISSUE IS DISMISSED AND IN RESPECT OF SECOND ISSUE IS ALLOWED . 18. THE ASSESSEE ALSO RAISED AN ADDITIONAL GROUND WHICH READS AS UNDER :- THE LEARNED ASSESSING OFFICER AND LEARNED C.I.T.( APPEALS) HAS ERRED IN TAXING THE RECEIPT OF COMPENSATION OF RS.30 LAKHS RECEIVED FOR EARLY VACATING THE PROPERTY AS INCOME FROM OTHER SOURCES WHICH WAS OFFERED BY THE ASSE SSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT IS SUBMITTED THAT SUCH COMPENSATION RECEIVED FROM THE TENANT BY THE LANDLORD FOR VACATING THE PROPERTY EARLIER THAN THE AGREEMENT IS NOT AN INCOME UNDER ANY SOURCE AND HEADS OF INCO ME UNDER THE INCOME TAX ACT. IT IS SUBMITTED THAT THE COMPENSATION RECEIVED OF RS.30 LAKHS BE TREATED AND ALLOWED AS NOT CHARGEABLE TO TAX. 19. AT THE TIME OF THE HEARING THE LEARNED AUTHOR ISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IF DE DUCTION @ 30% OF RS.30 LACS IS ALLOWED TO THE ASSESSEE IN PURSUANCE TO GROUND NO.4 OF THE APPEAL THAN THE ASSESSEE WILL HAVE NO GRIEVANCE AN D THIS ADDITIONAL GROUND IS NOT REQUIRED TO BE ADJUDICATED. IN VIEW OF OUR DECISION IN RESPECT OF GROUND NO.4 OF THE APPEAL THIS ADDITION AL GROUND OF APPEAL IS THEREFORE NOT ADJUDICATED AND DISMISSED. 20. GROUND NO.5 OF THE APPEAL READS AS UNDER:- 5. THE LEARNED CIT(A)II BARODA HAS ERRED IN LEVYIN G INTEREST U/S.234B/C/D OF THE ACT. THE LEVY OF INTEREST BE HE LD INCORRECT AND SAME BE DELETED NOW. 21. AT THE TIME OF HEARING NO AGREEMENTS WERE MAD E BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE O N THIS GROUND OF - 11 - APPEAL. WE HOLD THAT CHARGING OF INTEREST IS CONSEQ UENTIAL AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 22. IN THE RESULT THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED AS ABOVE. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 07 TH DAY OF MAY 2010. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 07 TH MAY 2010 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-II BARODA. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 27.04.2010 -------------- ---- 2. DRAFT PLACED BEFORE AUTHORITY 27.04.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 27.04.2010 ---------- --------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 27.04.2010 ----------- -------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 28.04.2010 ------- ------------- 6. KEPT FOR PRONOUNCEMENT ON 07.05.2010 -------- ------------ 7. FILE SENT TO THE BENCH CLERK 07.05.2010 ----- --------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------