What the courts have decided on section 71B, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Sanjeev Goyal v Union of India
High CourtHelps departmentNo later treatment found
My client took his housing loan in 2014 and the interest has always been fully set off against salary. From AY 2018-19 the officer restricts the set-off to Rs 2,00,000. Can I argue the cap cannot apply to a loan taken before the amendment?
No. The Delhi High Court upheld the constitutional validity of s.71(3A), inserted by s.31 of the Finance Act 2017, and rejected the alternative plea that it applies only to loans taken on or after 1 April 2017. The cap operates for assessment year 2018-19 and every later year on the loss of that year, whatever the vintage of the loan.
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Uday Garudachar v ITO
ITATHelps taxpayerNo later treatment found
My client set off the whole house property loss against salary for AY 2018-19, not knowing about the new Rs 2,00,000 cap. The officer restricted it and has levied a s.270A penalty for under-reporting. Can the penalty be resisted?
Yes, on this authority. The Bangalore Tribunal deleted a s.270A penalty where the assessee had disclosed the whole computation of house property income but had set off the loss in full because he was unaware of s.71(3A), which had been inserted with effect from assessment year 2018-19 — the very year in issue. The explanation was held bona fide within s.270A(6), so the addition did not amount to under-reported income.
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Sameer Kishore Koticha v DCIT
ITATHelps taxpayerNo later treatment found
The CPC has restricted my s.24(b) interest to Rs 2,00,000 by treating my only property as self-occupied. It is a commercial unit that I cannot live in. Can the cap apply?
No. The second proviso to s.24(b) caps the deduction only for a property referred to in s.23(2), and s.23(2) speaks of a house or part of a house in the owner's occupation for his own residence, which can only be a residential property. The Tribunal held the cap inapplicable to a commercial unit, allowed the whole interest of Rs 1,31,39,560, and directed that the resulting house property loss be carried forward under s.71B.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
