Judgment :- R. JAYASIMHA BABU, J. The questions referred to us, at the instance of the Revenue are, "(1) Whether, on the facts and in the circumstances of the case and having regard to the second proviso to s. 23(1) of the IT Act, the Tribunal was justified in allowing the claim of loss of the assessee in respect of new residential unit ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the word 'income' referred to in the second proviso to s. 23(1) could refer to only the annual value and not the 'income' after the deduction admissible under s. 24 ?" 2. The assessee had claimed the benefit of the deduction under s. 24 of the IT Act, 1961, after computing the annual value in accordance with ss. 22 and 23. The result of such computation was loss of Rs. 23, 451. The assessment years are 1974-75 to 1976-77. Sec. 23 of the Act as it stood prior to its amendment in 1984, at the end of the second proviso contained these words : "So, however, that the income in respect of any residential unit referred to in cl. (a) or cl. (b) is in no case a less". The AO held that the effect of these words was to prevent the assessee from claiming any amount as loss when the computation of income related to that from house property. That view of the AO was reversed in appeal and that order in appeal was affirmed by the Tribunal. The words relied upon by the AO came to be deleted by the Taxation Laws (Amendment) Act, 1984. The explanatory note to the amending Act which contains the reasons for the amendment sets out the reasons for the deletion of the last portion of the second proviso to s. 23(1) of the IT Act, thus : "Apprehension had been expressed that the above quoted words may be construed to imply that no loss shall be allowed in respect of such new residential units even when the loss arise as a result of other deductions claimed by the assessee as the interest paid on borrowed capital for the purpose of constructing the residential building. With a view to removing any controversy or doubt in the matter, the above quoted words have been omitted from the aforesaid second proviso." This would secure that the deductions admissible to the assessee under the provisions of s. 24 of the IT Act in computing the income from house property shall not be limited to annual letting value of the house property arrived at after the deductions under second proviso. 3. The amendment so effected was in our view only clarificatory as even de hors that amendment on a consideration of ss. 22 to 25 of the Act as it stood prior to the amendment it is clear that there was no limitation on the right of the assessee to compute the loss while computing the income from house property. 4. Sec. 22 of the Act provides that the annual value of the property consisting of the buildings and lands referred to therein shall be chargeable to income-tax under the head "Income from house property". Sec. 23(1) sets out the manner in which the annual value is to be ascertained. The second proviso to s. 23(1) provides for deductions from the value so ascertained in respect of the buildings referred to in sub-cls. (a) and (b) of that proviso. If the erection of those buildings had commenced after the 1st day of April, 1961, and completed before or after the 1st day of April, 1970, the deductions being limited for a period of 3 years or 5 years from the date of completion of the building as the case may be. It is at the end of the second proviso of s. 23(1) that the words of limitation, are found viz., that the income in respect of any residential unit referred to in cl. (a) or cl. (b) of the second proviso to s. 23(1) was in no case to be a loss after the deductions provided for therein are given effect to. Sec. 23 does not deal with any of the further deductions expressly provided for in s. 24. Sec. 24 prescribes the manner in which the income from house property is to be computed and for making such computation, the deductions referred to therein are required to be taken into account. The stage at which s. 24 is to be applied is at the stage reached after ss. Sec. 24 prescribes the manner in which the income from house property is to be computed and for making such computation, the deductions referred to therein are required to be taken into account. The stage at which s. 24 is to be applied is at the stage reached after ss. 22 and 23 have been applied and the amount of the annual value as reduced by the deductions provided for in s. 23 has been ascertained. 5. The only effect of the words of limitation found at the end of the second proviso to s. 23(1) is that after giving the deductions provided for in that proviso, the annual value which had been ascertained under s. 23(1)(a) or (b) as the case may be is not reduced to a negative figure. If the deduction provided for in the second proviso exceeds, the annual value as determined under s. 23(1)(a) or (b) the excess is to be ignored. 6. The deductions provided for in s. 24 are required to be made from out of the amount ascertained as the annual value under s. 23(1)(a) or 23(1)(b) as reduced by the amounts referred to in the second proviso. Sec. 24 itself does not provide that the result of the computation can never be a loss or that the loss is to be ignored. Sec. 24 is not made subject to the second proviso to s. 23(1). The words of limitation referred to in that proviso are not to be regarded as being part of s. 24. 7. The limitation with regard to the extent of the deduction of the annual value provided for in the second proviso to s. 23(1) is only with reference to the annual value determined under s. 23(1)(a) or 23(1)(b) and it has no relevance whatever for determining the extent of deductions provided for under s. 24 of the Act. 8. The Tribunal is right in the view that it took. The questions referred to us, are therefore, answered in favour of the assessee and against the Revenue.