Facts of the case:
| Rental receipt of trust | Rs. 1,16,88,161/- | |
| standard deduction u/s 24(a) of the IT Act of | Rs. 35,06,448/- | (30% of rental receipts) |
Now, the issue arises, whether the computation of trust income is to be made on purely commercial considerations or as per taxation law. If income is to be computed on commercial considerations the deduction of Rs 35,06,448/- would have not been allowed. However, from a taxation point of view assessee trust is eligible for deduction.
Section 24 of the act:
Deductions from income from house property.
- Income chargeable under the head “Income from house property” shall be computed after making the following deductions, namely:—
(a) a sum equal to thirty per cent of the annual value;
(b) where the property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital:
A bare reading of the above makes it amply clear that the provisions of the Act do not provide any restriction whatsoever that any category of the taxpayer is excluded from this deduction.
It is settled law that the provisions of the Act have to be construed in a strict manner when there is no ambiguity whatsoever in the provisions of the Act. Hence, extrapolation made by learned CIT(A) that the Trust shall not be entitled to deduction u/s. 24 of the Act in computation of income from house property is totally unsustainable in law.
In the case of CIT v. Institute of Banking Personnel Selection, wherein capital expenditure for acquiring asset which was already shown as the application of income was held to be eligible for depreciation which was denied by the Revenue.
Conclusion:
Hence, the assessee trust is eligible for standard deduction from income from house property and thus, 30% of rental income is deemed to be utilized for purposes of the trust.