Vacancy allowance under section 23(1)(c) can justify nil annual value, but factual proof of prior letting must be verified.

Section 23(1)(c) permits nil annual letting value where a property let out in an earlier year remains vacant in the relevant year and no actual rent is received or receivable because of that vacancy. The Tribunal accepted that vacancy allowance can apply if the factual foundation is proved, but noted that the record did not clearly establish whether rental income from the property had been offered in the immediately preceding year. The matter was therefore remitted to the Assessing Officer for verification of the relevant facts and a fresh order.

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Issues: Whether the annual letting value of the disputed property could be taken at nil under section 23(1)(c) of the Income-tax Act, 1961 where the property was claimed to have been let out in earlier years but remained vacant during the relevant year.

Analysis: The claim rested on vacancy allowance under section 23(1)(c), which applies where a property let out in an earlier year remains vacant during the previous year and, because of such vacancy, no actual rent is received or receivable. The Tribunal accepted the principle that a taxpayer should get the benefit of vacancy allowance if the factual foundation is established. At the same time, the record did not clearly show whether rental income from the property was offered in the immediately preceding assessment year, which was material to applying the provision.

Conclusion: The issue was decided in favour of the assessee in principle, but the addition was not finally deleted. The matter was set aside to the Assessing Officer for verification of the relevant facts and for a fresh order.

Final Conclusion: The appeal succeeded to the limited extent of remand, with the assessee being granted the benefit of a fresh factual examination on the vacancy claim.

Ratio Decidendi: Where a property is shown to have been let out in an earlier year and remains vacant in the relevant year, section 23(1)(c) can justify nil annual value, but the factual predicate for vacancy allowance must be established before relief is granted.

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