Beena Pillai ORDER
Chandra Poojari, Member (A)
1. This appeal by the assessee is directed against the order dated 11.10.2017 of the CIT(Appeals)-5, Bengaluru for the assessment year 2011-12 on the following grounds:-
"1.1 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in adjudicating the order as passed by him. The order is bad in law and liable to be quashed.
2.1 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in confirming the order passed under section 154 by the assessing officer as to allowing only Rs. 1,08,668/- towards loss as against the entire value of loss of Rs. 1,37,90,289/-.
2.2 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in computing the losses as well as denying losses to be carried forward to the extent of Rs. 1,36,81,621/-[1,37,90,289 less 1,08,668]
3.1 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in denying the claim of interest deduction based on technical issue in the CPC's system that fails to permit such deduction.
3.2 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in disallowing interest on the ground that there is no rental income.
4.1 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in the interpretation of the provisions of law. On facts and in the circumstances of the case and law applicable, order of the Assessing Officer ought to be quashed.
5.1 The learned Commissioner of Income Tax (Appeals)-5, Bangalore has erred in summarily rejecting the submissions made by the assessee.
6.1 In view of the above and other grounds to be adduced at the time of hearing, the appellant prays that the order passed by the learned Commissioner of Income tax (Appeals) 5, Bangalore be quashed
And
Losses of Rs. 1,37,90,289/- be allowed to be carried forward as claimed in the revised return of income.
The appellant prays accordingly."
2. The facts of the case are that assessee filed a loss return of Rs. 1,76,77,280 on 30.9.2011. However, the said return was revised to rectify certain mistakes on 7.3.2013 declaring a loss of Rs. 1,37,90,289. In the said revised return, the assessee had claimed interest paid on loan taken for construction of commercial property amounting to Rs. 1,38,31,621 as deduction u/s. 24 of the Act while computing loss under the head 'income from house property'. The above sum included 1/5th of pre-construction period interest of Rs. 68,36,284. During the year, some balances relating to sundry creditors amounting to Rs. 41,332 were written off and offered to tax under the head 'income from other sources'. The loss from house property was set off against income from other sources to arrive at the net loss of Rs. 1,37,90,289 and this was carried forward.
3. The ACIT, CPC issued intimation u/s. 143(1) on 1.6.2013 wherein the losses of current year to be carried forward was determined at Rs. 1,08,668 as against loss of Rs. 1,37,90,289 carried forward in the return of income. The assessee filed rectification petition on 11.3.2014 seeking above correction in the intimation. The order u/s. 154 was passed on 26.3.2014 by ACIT(CPC) wherein it was reiterated that loss to be carried forward was at Rs. 1,08,668 as against the claim of assessee at Rs. 1,37,90,289. The CIT(Appeals) confirmed the order of the ACIT(CPC). Against this, the assessee is in appeal before us.
4. The ld. AR submitted that there was a payment of interest of Rs. 1,38,31,621 out of which Rs. 41,332 was set off against income from other sources and balance of Rs. 1,37,90,289 has to be carried forward. According to her, there is no necessity of having rental income so as to claim deduction u/s. 24 towards interest payment on construction of commercial building. According to her, the construction of property has been completed and interest has been paid. The annual letting value of the property was NIL on account o........