Tax Benefit not claimed in Return can be

claimed during Assessment

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 03 Mar 2019
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Case Law Details

Case Name : Shri Sanjay Gurudasmal Chawla Vs Income Tax Officer (ITAT Mumbai)
Appeal Number : ITA No. 2931/MUM/2017
Date of Judgement/Order : 30/11/2018
Related Assessment Year : 2012-13
Courts : All ITAT (5720) ITAT Mumbai (1773)
Download Judgment/Order

Shri Sanjay Gurudasmal Chawla Vs ITO (ITAT Mumbai)

Assessing Officer rejected the claim of the assessee for deduction u/s. 24(b) of the Act for the
reason that the assessee claimed such deduction only by way of revised computation in the
course of the assessment proceedings. However, this claim of the assessee was entertained by the
Ld.CIT(A). The question of whether assessee can amend a return filed by him for making
additional claim for deduction other than filing a revised return has been answered in favour of
the assessee by the Hon’ble Jurisdictional High Court in the case of CIT v. M/s. Pruthvi Brokers
& Shareholders (P.) Ltd. in IT Appeal. No. 3908 of 2010 dated 21.06.2012.

It was held that even if a claim is not made before the assessing officer, it can be made before the
appellate authorities.

FULL TEXT OF THE ITAT JUDGMENT

1. This appeal is filed by the Revenue against the order of the Learned Commissioner of Income
Tax (Appeals) – 33, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 13.02.2017 for the
Assessment Year 2012-13.

2. The Revenue has raised the following grounds in its appeal: –

“1. “On the facts and circumstances of the case, the Ld CIT(A) has erred in deleting the addition
of Rs. 50,40,000/- by way of set-off of interest expenditure of Rs. 93,64,517/- under the head
House Property and ignoring the fact that the deduction u/s 24(b) was not claimed by the
assessee in the return of income.”

2. “On facts and circumstances of the case, the Ld CIT(A) has erred in not considering the
decision in the case of Goetze (India) Ltd. Vs. CIT(2006)284 ITR 323(SC) while allowing the
claim of interest expenditure under the head House Property.”

3. “On facts and circumstances of the case, the Ld CIT(A) has erred in allowing set-off of loss
under the head house property against other heads without appreciating the fact that the house
property loss was not claimed by the assessee in the return of income and there is no provision in
the act allowing an amendment in the return of income without a revised return of income.”

4. “The appellant prays that the order of Ld. CIT(A) on the above grounds be set aside and that
of the assessing officer be restored.”

5. The appellant carves leave to amend or to alter any ground or add a new ground, which may
be necessary.”

3. The first two grounds relate to the dispute as to whether the assessee is eligible to claim
deduction u/s. 24(b) of the Act when no such claim was made in the return of income.

4. Briefly stated the facts are that, assessee filed return of income on 07.2012 declaring taxable
income of ₹.4,61 ,880/-. During the course of assessment proceedings assessee furnished a letter
dated 07.03.2015 and a revised computation of income declaring loss of ₹.9,73,795/-. In the
revised computation of income assessee claimed deduction u/s. 24(b) of the Act towards interest
on housing loan and the related loss under the head “income from house property” was claimed
setoff against income from salary and other sources. However, the Assessing Officer completed
the assessment u/s. 143(3) on 30.03.2015 rejecting the claim of the assessee. The Assessing
Officer was of the view that unless the assessee files a revised return making its claim, the claim
made in the course of assessment proceedings by way of letter and revised computation of
income cannot be entertained. He also observed that even in the original return of income the
assessee has not offered any income from house property and no claim was made u/s. 24(b) of
the Act.

5. On appeal the Ld.CIT(A) entertained and allowed the claim of the assessee with a further
direction that the loss under the head income from house property be set off against other heads
as per the provisions of Income-tax Act. Against this order, the Revenue is in appeal before us.

6. DR vehemently supported the order of the Assessing Officer and contended that since the
assessee has not made any claim in the original return and also not filed a revised return, the
claim of the assessee which was made in the course of the assessment proceedings by way of
letter and revised computation of income was rightly rejected by the Assessing Officer.

7. AR strongly placed reliance on the order of the Ld.CIT(A).

8. We have heard the rival submissions, perused the orders of the authorities below. Assessing
Officer rejected the claim of the assessee for deduction u/s. 24(b) of the Act for the reason that
the assessee claimed such deduction only by way of revised computation in the course of the
assessment proceedings. However, this claim of the assessee was entertained by the Ld.CIT(A).
The question of whether assessee can amend a return filed by him for making additional claim
for deduction other than filing a revised return has been answered in favour of the assessee by
the Hon’ble Jurisdictional High Court in the case of CIT v. M/s. Pruthvi Brokers & Shareholders
(P.) Ltd. in IT Appeal. No. 3908 of 2010 dated 21.06.2012. While answering the question the
Hon’ble High Court observed as under:

“22. It was then submitted by Mr. Gupta that the Supreme Court had taken a different view in
Goetze (India) Limited v. Commissioner of Income-tax, (2006) 157 Taxman 1. We are unable to
agree. The decision was rendered by a Bench of two learned Judges and expressly refers to the
judgment of the Bench of three learned Judges in National Thermal Power Company Limited vs.
Commissioner of Income-tax (supra). The question before the Court was whether the appellant-
assessee could make a claim for deduction, other than by filing a revised return. After the return
was filed, the appellant sought to claim a deduction by way of a letter before the Assessing
Officer. The claim, therefore, was not before the appellate authorities. The deduction was
disallowed by the Assessing Officer on the ground that there was no provision under the Act to
make an amendment in the return of income by modifying an application at the assessment stage
without revising the return. The Commissioner of Income-tax (Appeals) allowed the assessee’s
appeal. The Tribunal, however, allowed the department’s appeal. In the Supreme Court, the
assessee relied upon the judgment in National Thermal Power Company Limited contending that
it was open to the assessee to raise the points of law even before the Tribunal. The Supreme
Court held :-

“4. The decision in question is that the power of the Tribunal under section 254 of the Income-
tax Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of
which the issue of law can be raised before the Tribunal. The decision does not in any way relate
to the power of the Assessing Officer to entertain a claim for deduction otherwise than by filing a
revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make
it clear that the issue in this case is limited to the power of the assessing authority and does not
impinge on the power of the Income-tax Appellate Tribunal under section 254 of the Income tax
Act, 1961. There shall be no order as to costs.” [emphasis supplied]

23. It is clear to us that the Supreme Court did not hold anything contrary to what was held in the
previous judgments to the effect that even if a claim is not made before the assessing officer, it
can be made before the appellate authorities. The jurisdiction of the appellate authorities to
entertain such a claim has not been negated by the Supreme Court in this judgment. In fact, the
Supreme Court made it clear that the issue in the case was limited to the power of the assessing
authority and that the judgment does not impinge on the power of the Tribunal under section
254.

24. A Division Bench of the Delhi High Court dealt with a similar submission in Commissioner
of Income-tax v. Jai Parabolic Springs Limited, (2008) 306 ITR The Division Bench, in
paragraph 17 of the judgment held that the Supreme Court dismissed the appeal making it clear
that the decision was limited to the power of the assessing authority to entertain a claim for
deduction otherwise than by a revised return and did not impinge on the powers of the Tribunal.
In paragraph 19, the Division Bench held that there was no prohibition on the powers of the
Tribunal to entertain an additional ground which, according to the Tribunal, arises in the matter
and for the just decision of the case.

25. In the circumstances, it is not necessary to decide the other questions raised by Mr. Mistri.”

9. In view of the above decision of the Hon’ble Jurisdictional High Court the Ld.CIT(A) rightly
entertained the claim of the assessee.

10. Coming to the merits of the claim, the Ld.CIT(A) observed that deduction u/s. 24(b) of the
Act can be disallowed only if the Assessing Officer gives a finding that the conditions mentioned
in the Act are not followed or the property has not been acquired with borrowed capital or no
interest is payable on such capital and since no such finding is given by the Assessing Officer, he
held that Assessing Officer is not justified in not accepting the claim of the assessee u/s. 24(b) of
the Act. Ld.CIT(A) also referred to the certificate issued by SBI in respect of interest paid on
housing loan and also observed that since no contrary material was brought on record by the
Assessing Officer there is no justification for not accepting the claim of the assessee.

11. We observe that the claim made by the assessee in the form of a letter and by way of revised
computation of income in the course of the assessment proceedings was never entertained by the
Assessing Officer. The Assessing Officer has not gone into the claim at all. Since the Assessing
Officer has not gone into the claim of the assessee no finding was given on the claims made by
the assessee. Therefore, the observations of the Ld.CIT(A) that since there is no adverse finding
by the Assessing Officer, there is no justification in accepting the claim of the assessee is wrong.
Since the Assessing Officer has not gone into the claim of the assessee, we are of the view that
this matter has to go back to the Assessing Officer for proper verification of details of property
acquired, rental income shown, loan borrowed for acquisition of property, interest paid on such
loan etc., so as to satisfy that the condition u/s. 24(b) of the Act are complied for allowing such
deduction. Thus, we restore the issue of deduction u/s. 24(b) of the Act to the file Assessing
Officer for denovo consideration. The Assessing Officer shall provide adequate opportunity of
being heard to the assessee and adjudicate the issue in accordance with law.

12. Ground No.3 of grounds of appeal raised by the Revenue is against set off of loss from
income from house property against other heads. This ground is consequential to Ground Nos. 1
& 2 and therefore this ground is also restored to the file Assessing Officer to decide in
accordance with law after providing adequate opportunity of being heard to the assessee.

13. In the result, appeal of the Revenue is allowed for statistical purpose.