AI Drafter 
TaxTMI 
TaxTMI 
2015 (6) TMI 1073
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....s as "Pre-operative expenses" and such expenses can be claimed u/s.35D of the I.T.Act. 2. Facts in brief are that the AO in his assessment order, was of the opinion that since the assessee company was formed with the object of acquiring immovable property to be let out, and the said property had not been let out, the assessee had not commenced "business" and consequently all the expenditure, including the interest, is to be treated as "pre-operative expenditure". He, therefore, did not accept the assessee's contention that the income is to be computed under the head Income from House Property" and consequently disallowed the interest as a pre-operative expenditure and thereby also disallowed the claim of the assessee for carry forward of....
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....7 ITR 246) long back, which was being followed in number of later decisions. Even for Wealth tax purposes the same decision was relied upon in the case of Smt. Smitaben N. Ambani vs. CWT (323 ITR 104) (Bom.). Therefore, action of Assessing Officer in determining the ALV on the basis of cost of the property can not be upheld. 5. Ld. CIT(A) dismissed the contentions of the assessee on the reason that assessee has not furnished the Municipal ratable value to AO in the proceedings. This observation of CIT(A) is factually not correct as the assessee vide letter dated 07.12.2009 to AO (at Page-4 of the letter) clearly stated the Municipal ratable value at Rs. 10 per sq.ft. and enclosed the working as Annexure-5 and 6 to the letter. These conte....
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....cannot coexist that the property is actually let out also in the relevant previous year, and that the property in the same year is vacant also during whole of the same year. [Para 12] The second interpretation suggested by the revenue was that the property should be actually 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 t....
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....past, it is a let out property, although the present owner never intended to let out the same. Therefore, it is not at all relevant as to whether the property was let out in past or not. These words do not talk of actual let out also but talk about the intention to let out. If the property is held by the owner for letting out and efforts are made to let it out, that property is covered by clause (c) and this requirement has to be satisfied in each year that the property was being held to let out but remained vacant for whole or part of the year. Above discussion shows that meaning and interpretation of the words 'property is let' cannot be 'property actually let out'. Thus, if a property is held with an intention to let o....
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....ncome from house property. [Para 18]" 7. Respectfully following the same, we hold that the assessee is entitled to value property at NIL during the year u/s. 23(1)(c). Therefore, Assessing Officer is directed to accept the ALV at NIL and work out the loss under the head "House Property" accordingly." In the instant case also the CIT(A) has directed the AO to allow carry forward losses under the head income from house property u/s.71B of the Income Tax Act to be set off against the income under the same head. 5. As the facts during the year under consideration are pari materia with the case law relied on by the ld. AR in case of Aryabhata Properties Limited (supra), we do not find any infirmity in the order of CIT(A) fo....