Law: Income Tax Act, 1922

Section: 9,9(1)(iv)

Indian Income Tax Act, 1922 (XI of 1922)-Section 9(1)(iv)---House property-Compound interest-Deduction interest on mortgage or charge of Image- property- Whether should be confined to interest payable on the capital charge and not the addition interest for assessees failure to pay on dug date-Held yes. In computing income from house property what section 9(1)(iv) of the income tax act, 1922 permit is deduction of the "amount of any interest on such mortgage or charge". Where the assessee is liable to pay compound interest what the assessee is entitled to deduct is the interest payable by him on the capital charge and not the due date has to be considered as part of the principal. In fact, the real capital charge is that which was originally due. The other portion is merely interest on which the assessee has agreed to pay interest and that is not the capital contemplated by section 9(1)(iv). Case affirmed:- Show Kisses Bhatter v. Commissioner of Income Tax (1969) 74 I.T.R. 331. ORDER [The Judgment of the Court was delivered by HEGDE J]-These are appeals by certificate. A common question of law is involved in these appeals. These appeals relate to a common assessee but arise from three different assessments in respect of, three different assessment, years (1956-57 to 1958-59). The accounting year's being the respective calender years. The question of law arising for decision is whether the assessee was entitled to claim deduction of compound interest (under section 9(1)(iv) of the Indian Income Tax Act, 1922. The High Court answered that question in the negative and in favour of the department. Aggrieved by that decision, the assessee has come up in appeal to this court. To decide the question set out above, it will be sufficient if we refer to the facts relating to one of the assessment years, i.e., 1956-57. The material facts are as follows: The assessee is a trustee of a house property at Chandmari Road, Howrah. In respect of that house there was a title suit filed by one Durga Prasad Chamria agains Smt. Anardeyi and others claiming title over that property and for other reliefs. A consent decree was passed in that suit on April 19, 1928. Undest the terms of…

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