U.T.Shah, - (1.) SINCE a common point is involved in these appeals, they are disposed of together for the sake of convenience.
(2.) The assessee is a practising Chartered Accountant and is a partner in the firms of M/s. M.B. Agrawal & Co., and M/s. M.B. Agrawal & Associates. The assessment years are 1987-88 and 1988-89 and the relevant previous years are the corresponding financial years ended on 31-3-1987 and 31-3-1988 respectively. The facts pertaining to the issue involved could be gathered from the statement of facts filed by the assessee along with the Appeal Memo before the first appellate authority. The said facts are reproduced below : 1. Your appellant has two self-occupied flats. One flat in Bhavani Complex 'A' and the other flat in Bhavani Complex 'B'. Both the flats are not actually let during any part of the previous year and no other benefit therefrom is derived by the appellant. These facts are not under dispute. The income from self-occupied flat in Bhavani Complex 'B' is taken as Nil. This is as per the contemplation under Section 23(2)(a)(i) of the Income-tax Act, 1961, and no deduction whatsoever are claimed. Your appellant has exercised the option as given to the appellant under Section 23(2)(b) of the IT Act, 1961. Hence in case of one self-occupied flat in Bhavani Complex 'B' income is taken as Nil and no deductions are claimed. In the case of second self-occupied flat in Bhavani Complex 'A' the computation of income from house properly is attached in the statement, of income filed along with the return of income, as deemed let out. The actual interest Rs. 55,366 accrued paid during the previous year relevant to the assessment year 1987-88 is claimed as deduction under Section 24(1)(vi) of the Income-tax Act, 1961, The limit of the deduction of interest in Section 24(2) is applicable only to one self-occupied flat. This is clearly stated to the proviso to Section 24(2). The full deduction of interest is available in the case of more than one self-occupied flats as deemed let out flat and the restriction under Section 24(2) is not applicable to the second self-occupied flat. Learned Income Tax Officer erred in restricting the interest deduction at Rs. 5,000 for the second self-occupied flat. It may be mentioned that the actual interest paid for the assessment year 1988-89 is Rs. 47,328 in place of Rs. 55,366 in respect of the assessment year 1987-88.
(3.) WHILE framing the assessment under Section 143(3) of the Act, the ITO allowed deduction of Rs. 5,000 only under Section 24(1) of the Act. The said action of the ITO is confirmed by the first appellate authority.;