TaxTMI 
TaxTMI 
TaxTMI 
2011 (4) TMI 1383
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.... erred both in law as well in facts in ignoring the amendment of law relating to Taxation of income from property with effect from 1st day of April 2002. The amended law was effective from A.Y. 2002-03 onward. 6. That according to clause (c) of sub section (1) of section 23 (substituted with effect from 01.04.2002) "Where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect hereof is less than the sum referred to in clause (a) the amount so received or receivable shall be treated as the ALV. 7. That the learned Commissioner of Income Tax (Appeal) has erred in retaining the addition of Rs. 73,241/- as income from property. 8. That the learned Commissioner of. Income Tax (Appeal) has erred in retaining the additions of Rs. 38,717/- and 14,156/- towards the income of the appellant. 9. That the orders of the Authorities below are against the merits circumstances and legal aspect of the case." 3. During the course of hearing, the ld. Counsel for the assessee, at the very outset, stated that he has instruction not to press grounds No.1 ....
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....ner is also lying vacant. The 6th floor of the said building owned by other owner is also vacant. As the 5th floor is now not serviced by lift as it became non-operative it is not capable of being let out. The Assessing Officer has also accepted that this portion owned by the appellant is lying vacant from the financial year 2002-03. Prior to this it was let out to Mobilink at a monthly rent of Rs. 7,266/- per month. When the lift became non-operative they vacated the portion owned by appellant and since then it is lying vacant. The Assessing Officer while completing the assessment for A. Y. 2005-06 had wrongly interpreted section 23(1)(c) to mean that the annual letting value of such a vacant portion is also taxable which is not correct. The old section 23(1) of the I.T Act, was substituted by a new section 23(1) by the Finance Act, 2001 w.e.f. 01.04.2002 with a view to rationalize the provisions relating to income from house property. The provisions of substituted section 23(1) were explained by circular No. 14 of 2001 in para 29.1 and 29.2 it has been clarified as under: " Where the property or part of property or any part of the property is let out and was vacant during the....
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.... Hence, in this case, the provisions of Section 23(1)(a) of the I.T. Act,1961 are applicable and the annual letting value required to be worked out. The assessing officer has estimated the fair market rent of property @ Rs. 24,000/- per month. However, the assessing officer has not given any basis for his estimation. Up to A Y. 2002-03, the monthly rent of property was Rs. 7266/-. This is accepted fact upto A Y. 2002-03. For the A. Y. 2004-05, the increase in this monthly rent may not be more than 20% and which is most reasonable. Thus, the monthly rent of this property is determined at Rs. 8,719/- by taking 20% increase and accordingly the Annual letting value is worked out at Rs. 104,630/-. The assessee is allowed 30% deduction u/s 24 of the I.T.Act. Hence, the Annual Letting Value of property for the assessment year 2004-05 is taken at Rs. 73,241/-." 8. Now, the assessee is in appeal. 9. The ld. Counsel for the assessee reiterated the submissions made before authorities below and further submitted that the property in question was earlier let out, but remained vacant from financial year 2002-03 till the year under consideration and no income was earned by the assessee. It wa....
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....y let out during any time prior to the relevant previous year and then only, it could be said that the property is let out and clause (c) would be applicable. The tense of the verb used prior to the word 'let' is present tense and not past tense. It means that the provisions of clause (c) talk regarding the relevant previous year and not of any earlier period and if that be so, the contention of the revenue was not acceptable. [Para 13] Now the question arose as to what would be the correct and workable interpretation of the words 'property is let' in clause (c) of section 23(1). For this, it is to be determined as to whether actual letting out is a must for a property to fall within the purview of clause (c) of section 23(1). [Para 15] From a reading of the provisions of sub-section (3) of section 23, it appears that the Legislatures in their wisdom have used the words 'house is actually let'. This shows that the words 'property is let' cannot mean actual letting out of the property because had it been so, there was be no need to use the word 'actually' in subsection (3) of section 23. Regarding the scope of referring to actual letting out in ....