By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punjabi, Bhadresh Doshi, Bhadresh Doshi
Chartered Accountants
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Section 22, section 23(1)(a), section 23(1)(c) — Annual value of property which could not be let out throughout the previous year needs to be taken as ‘nil’ in accordance with the provisions of section 23(1)(c).
Facts:
The assessee, a non-resident Indian, owned eight properties in India. During the relevant previous year, four properties were let out, whose annual value was offered for taxation under the head ‘Income from House Property’. Annual value of one property was claimed to be ‘nil’ on the ground that it be regarded as self-occupied property. For the other 3 properties in Mumbai annual value was regarded as ‘nil’ under the provisions of section 23(1)(c) of the Act. Before the AO it was submitted that of these 3 properties — one was old and was not in a habitable condition. The second property was let out in the earlier year and also in the subsequent year. It was contended that despite the best efforts, the assessee could not find a tenant for this property. As for third property it was purchased during the year and was let out in subsequent year. The AO held that since the assessee had not shown any proof regarding the efforts made to let out these three properties, it was quite inconvincible that there can be any hardship faced in letting out since these properties were located in prime localities like Bandra and Andheri (East) in Mumbai. He considered 70% of the rent received in subsequent year for each of the two properties to be their annual value. Accordingly, he added Rs.6,95,555 to the total income of the assessee.
Aggrieved the assessee preferred an appeal to the CIT(A) who held that the annual value of these properties needs to be computed u/s.23(1)(a) of the Act.
Aggrieved the assessee preferred an appeal to the Tribunal.
Held:
The Tribunal noted that the Lucknow ‘B’ Bench has, in the case of Smt. Indu Chandra v. DCIT, (ITA No. 96 (Lkw)/2011, dated 29-4-2011, for A.Y. 2004- 05), following the decision of the Mumbai Bench in the case of Premsudha Exports (P) Ltd. v. ACIT, [110 ITD 158 (Mum.)] decided the issue in favour of the assessee. The Tribunal also noted that the facts involved in the present case are similar to the facts before the Lucknow Bench in the case of Smt. Indu Chandra. Accordingly, following the decision of the Lucknow Bench, the Tribunal deleted the addition made by the AO and sustained by the CIT(A).
The appeal filed by the assessee was allowed.
