Commissioner of Income Tax vs Rajesh Khandelwal

On an application filed u/s 256(1) of the IT Act, 1961, Tribunal has referred the following question for our opinion :

"Whether, on the facts, in the circumstances of the case and in law, the Tribunal was justified in upholding the order of the Dy. CIT(A), who has accepted the claim of the assessee u/s 80C, towards the payment of Rs. 10,000 made under the Kalptaru Scheme to Rajasthan Housing Board for purchase of residential house despite the fact that the above payment will qualify for deduction only if the income from the house is chargeable to tax under the head "Income from house property" in the assessment year in which the deduction is claimed ?"

The assessee is an individual and derives income from salary from LIC of India. During the course of assessment, AO has noticed that assessee has claimed a deduction of Rs. 10,000 towards the payment made under the "Kalptaru Scheme" to Rajasthan Housing Board for purchase of residential house during the assessment year under consideration. ITO disallowed this claim of the assessee holding that the assessee has neither constructed the house nor the house has been constructed by Rajasthan Housing Board in the previous year, therefore, assessee is not entitled for any deduction of Section 80C of the Act.

In appeal before the Dy. CIT(A), Dy. CIT(A) directed the AO to allow the claim of the assessee.

In appeal before the Tribunal, the Tribunal has considered the language of Section 80C(2)(h)(ii)(a) of the Act and confirmed the view taken by Dy. CIT(A).

None appeared for the assessee. Heard learned counsel for the Revenue Mr. Mathur. The facts are not in dispute that Rs. 10,000 has been paid by the assessee for purchase of house. Sub-clause (a) of Clause (ii) of Clause (h) of Sub-section (2) of Section 80G reads as under :

"For the purposes of purchase or construction of residential house property, the construction of which is completed after the 31st day of March 1987, and the income from which is chargeable to tax under the head "Income from house property" (or which would, if it had not been used for the assessee''s own residence, have been chargeable to tax under that head), where such payments are made towards or by way of:

(a) any instalment or part-payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis".

The facts are also not in dispute that assessee has paid Rs. 10,000 from this income chargeable to tax, Once the assessee has paid any amount out of his income chargeable to tax for purchase of a house or construction of residential house property, the assessee is entitled for deduction of that amount as provided u/s 80C of the Act.

Clause (a) of Sub-clause (ii) provides that any instalment or part-payment of any amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis, the assessee is entitled for deduction u/s 80C of the Act,

No such provision is there u/s 80C of the Act, which requires that a house should be constructed on that date or house should be identified on the date of payment or part-payment. If any part-payment is made for purchase of the house, that should be allowed as deduction, as provided u/s 80C of the Act particularly when payment of Rs. 10,000 is not in dispute. In our view there is nothing wrong in the order of the Tribunal on the facts stated above.

In the result, we answer the question in affirmative i.e., in favour of the assessee and against the Revenue.

Reference so made stands disposed of accordingly.