Law: Income Tax Act, 1961

Section: 24(1)(iv)

Income-tax ----Income from house property---Deductions---Annual charge---When deductible---Loan taken on security of house for payment of estate duty--Interest on loan---Not deductible---Indian Income Tax Act, 1961, S. 24(1)(iv). A charge which is (1) either not created by the assessee or (2) which is not created by the assessee voluntarily in the sense that it is created or thrust upon the assessee either by operation of law or by a decree of a Court or be the act of his predecessor-m-title or by reason of the property coming into his hands with an existing or overriding charge, will have to be treated as an involuntary charge ]or the purpose of section 24(1)(iv) of the Indian Income Tax Act, 1961. The language of section 24(1)(iv) incorporates the concept of a charge being voluntarily created by the assessee as against a charge which comes into being by operation of law or by virtue of an order of the Court or by the act of parties other than the assessee such as when the assessee gets a property already subject to a charge. Only those annual charges, which are not created by the assessee voluntarily in this sense, are capable of being deducted from the income from house property. The assessee was the executor and trustee of SM. On the death of SM, estate duty proceedings were initiated against the assessee leading to the demand for the payment of estate duty. For paying the estate duty the assessee raised an overdraft with the bank on the security of the house property by creating a charge on it for the repayment of the loan as well as interest. On the loan so borrowed, interest became payable for the assessment years 1969-70, 1970-71 and 1971-72. The assessee, in its assessment for these three years, claimed deduction of these amounts from the income of the house property under section 24(1)(iv) of the Income Tax Act, 1961. The Tribunal allowed this deduction. On a reference: Held, that the interest was not deductible under section 24(1)(iv) in computing the income from property. Clive Buildings (Calcutt) Ltd. v. CIT (1989) 175 ITR 515 (Cal.); CIT v. Indramani Devi Singhania (1991) 189 ITR 124 (All.); CIT v. Rajah Dhanrajgiriji (1985) 154 ITR 719 (AP); CIT…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492