Vacancy allowance under property income rules applies only to true vacancies; collection charges need actual incurrence.

Under section 9, a vacancy allowance applies only to a true vacancy in a house ordinarily let and not in the owner's occupation; a house merely left unused while still occupied by the owner does not qualify. Collection charges are deductible from annual value only if they have actually been incurred and only within the statutory limit, so a hypothetical allowance cannot be assumed from the notional nature of annual value. The reference was answered against the assessee on both issues.

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Issues: (i) Whether vacancies in residential houses occupied by the assessee, but not used by him during the year, entitled him to an allowance while fixing the annual value under section 9; (ii) Whether collection charges could be deducted from the annual value of such houses under section 9(1)(6).

Issue (i): Whether vacancies in residential houses occupied by the assessee, but not used by him during the year, entitled him to an allowance while fixing the annual value under section 9.

Analysis: The allowance for vacancies was held to be directed to cases where the house is not in the owner's occupation and is ordinarily let, so that the vacancy is between tenancies. A house occupied by the owner but not used for residence is not vacant within the meaning of the provision. The provision could not be extended to houses merely remaining unused while still in the owner's occupation.

Conclusion: The assessee was not entitled to an allowance for vacancy in respect of the residential houses in question.

Issue (ii): Whether collection charges could be deducted from the annual value of such houses under section 9(1)(6).

Analysis: The deduction for collection charges was treated as allowable only where such charges had actually been incurred, and then only up to the prescribed maximum. The annual value was a notional letting value, but that did not justify assuming a hypothetical deduction for collection expenses that had not been incurred. The reasoning was supported by the treatment of other deductions under the same section, which depended on actual payment or existing liability.

Conclusion: The assessee was not entitled to deduct collection charges unless they had actually been incurred.

Final Conclusion: The reference was answered against the assessee on both questions, and the Revenue succeeded on the substantive issues decided.

Ratio Decidendi: Under section 9, a vacancy allowance applies only to true vacancies in houses not in the owner's occupation, and deductions for collection charges are permissible only when the expenditure has actually been incurred.

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