Law:

Section:

Section 24 of the Income-tax Act, 1961 - Income from house property - Deductions - Assessment years 1969-70 to 1971-72 - Whether interest paid by assessee-owner in respect of voluntary mortgage executed by him qua property in question was deductible under section 24(1)(iv) - Held, no - Whether tax paid by assessee-owner in respect of house which was lying vacant for years in question was deductible under section 24(1)(vii) even though aforesaid tax was a charge upon tenants - Held, yes FACTS For the assessment years 1969-70 to 1971-72 the assessee claimed deduction under section 24(1)(iv) in respect of the interest paid by him in respect of voluntary mortgage executed by him qua property in question. The assessee also claimed deduction of the tax paid qua the house called Bhumi Bhavan Kar. The lower authorities disallowed the assessee's claims. However, on appeal, the Tribunal allowed both the deductions. On reference: HELD It is evident from reading of clauses (iii ) and (iv) of sub-section (1) of section 24 that clause (iii) which permitted any amount paid by way of interest on a mortgage or other capital charge was deleted and clause (iv ) was amended in such a manner as to make only that annual charge which is not voluntary or which does not amount to a capital charge alone as deductible. Even if it is agreed that the expression 'annual charge' includes mortgage, the interest paid on such mortgage would not be deductible for the simple reason that the mortgage was not involuntary. So long as the mortgage is voluntary, the interest paid thereon is not deductible under clause (iv). Therefore, the Tribunal was not justified in allowing deduction in respect of the interest paid on mortgage executed by the assessee. As regards the deduction of the tax paid by the assessee, the Tribunal, no doubt, stated that the aforesaid tax was a charge upon the tenants but at the same time it also stated that for the years in question the house was lying vacant and yet the tax was levied and paid by the assessee-owner. If so, the Tribunal was justified in holding that the aforesaid tax was deductible under section 24(1)(vii). JUDGMENT Reddy, CJ. - Following two questions have…

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