TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 445
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....that they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 4. The Ld. CIT(A) has erred in law and in facts of the case in confirming action of Ld. AO in levying interest u/s 234A/B/C/D of the Act. 5. The Ld. CTT(A) has erred in law and on the facts in confirming the action of ld. AO in initiating penalty u/s 271(l)(c) of the Act. 2. Briefly stated facts as culled out from the records are that assessee is an individual having income from salary, loss from house property and business loss. Return of income declaring total income of Rs. 2,72,680/- was filed electronically on 29.09.2011. The case was selected for scrutiny assessment and notice u/s 143(2) of the Act was issued on 31.07.2012 followed by notice u/s 142(1) of the Act and duly served. Necessary details were called for and the information along with audited financial statements were provided. During the course of assessment proceedings ....
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....ong term capital gain which was shown in the computation for which assessee agreed to pay tax. Accordingly, income was assessed at Rs. 14,01,772/- and business loss allowed to be carried forward at Rs. 9,13,177/-. Against the impugned addition of Rs. 13,02,000/- assessee went in appeal before the first appellate authority but could not succeed as the impugned amount was sustained by ld. CIT(A) by observing as follows :- 2.2 ! have carefully considered the contention of the appellant as well as the reasoning given by the A.O. in his assessment order. I have also perused various case laws relied upon by the appellant as well as by the A.O. including the CBDT Circular No.14 of 2001. Hon'ble High Court of Andhra Pradesh in the case of Vivek Jain vs ACIT (2011) 14 Taxman 146 (A.P) has further elaborated upon section 23(1). It states as follows :- "Section 23 of the Income-tax Act, 1961 - Income from house properly - Annual value - Assessment year 2002-03 - Whether under section 23(1)(c), period for which a let out property may remain vacant cannot exceed period for which property has been let out - Held, yes ~ Whether where property has not been let out at all during previous y....
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....d or receivable by the owner in respect thereof should be less than the sum referred to in clause (a ). It is only if these three conditions are satisfied, clause (c) of section 23(1) would apply in which event the amount received or receivable, in terms of clause (c) of section 23(1), shall be deemed to be the annual value of the property. Clause (c) does not apply to situations where the property has either not been let out at all during the previous year or, even if let out, was not vacant during the whole or any part of the previous year. Under the Explanation to section 23(1), for the purposes of clause (b) or (c ), the amount actually received or receivable by the owner shall not include the .amount of rent which the owner cannot realize. Self-occupation by the owner of a house would require the annual value of such house, or part of the house, to be taken as nil under section 23{2)(a) and, where the house cannot actually be occupied by the owner on account of his employment, business or profession, as nil under section 23(2)(b), provided that in terms of section 23(3)(a), the house or part of the house had not actually been let during the whole or any part of the previous ye....
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.... not lead to any hardship, inconvenience, injustice, absurdity or anomaly and, therefore, the rule of ordinary and natural meaning being followed cannot be departed from. Benefit under section 23(1 )(c) cannot be extended to a case where the property was not let out at all. [Para 15] There is no merit in the submission that the words "property is let" are used in clause (c) to take out those properties which are held by the owner for selfoccupation from the ambit of the said clause. Section 23(2)(a) takes out a selfoccupied residential house, or a part thereof from the ambit of section 23(1). - Likewise, under section 23{2)(b), where a house cannot actually be occupied bythe owner on account of his carrying on employment, business or profession at any other place requiring him to reside at such other place in a building not belonging to him, the annual value of the property is also required to be treated as nil , thereby taking it out of the ambit of section 23(1), Section 23(3)(a) makes it clear that section 23(2) would not apply if the house or a part thereof is actually let during the whole or any part of the previous year. Thus, only such of the properties which are occupied....
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....ate the ALV at Rs. 13,02,000/- for 16 shops u/s.23(l)(a). Assessing Officer relied on Yatinder Kumar v ITO (2011) 133 ITD 237 (Pune Trib.) which pertains to s.17(3) of the Act and is irrelevant, (para 3.6 i)) AO relied upon Vivekjain v ACIT (2011) 14_Taxman 146(AP) dated 25/01/2011 to make the addition. Ld.CIT quoted Vivek Jain v ACIT (2011) 14 Taxman 146(AP) and confirmed the addition of the Assessing Officer. It is submitted that the assessee had recently for AY 2010-11 let the property to IC1CI Prudential Insurance Ltd. but due to economic slowdown, it was vacated. This shows the intention of the assessee to let the property and hence it would fall u/s.23(l)(c). For this reason, the ALV would be NIL. The assessee's case is squarely covered by AC Sreeram v ACIT ITA No.l089/Bang/2010 dated 21/03/2012 which dealt with a case where there was intention to let out property, but it could not be let out due to a slowdown in the economy. It is submitted that for these reasons, the decision is squarely applicable to the assessee's case. Following a catena of decisions, it was held in AC Sreeram (supra). A literal interpretation of the section cannot survive because it cannot be th....
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....bearing No.27 to 42 situated at Amrapali -II, Complex, Ahmedabad which remained vacant through out the year and deduction of interest was claimed u/s 24 of the Act at Rs. 10,90,296/-. As per the assessee the impugned property was fetching rental income in the preceding F.Y.2009-10 as it was let out to ICICI Prudential Insurance Ltd. but the property got vacated and in the relevant previous year i.e. 2011-12 necessary efforts were made to let out the impugned shops but was unable to do so due to recession in the economy. On the basis of these reasons assessee claimed that under the provisions of section 23(1)(c) of the Act, ALV is nil after claiming vacancy allowance. Whereas ld. Assessing Officer was of the confirmed view that section 23(1)(c) of the Act will apply only if the property is vacant for some part of the year meaning thereby that for a certain part of the year property has to be let out and then only the assessee can claim vacancy allowance. As the impugned property remained vacant throughout the year ld. Assessing Officer did not allow the vacancy allowance u/s 23(1)(c) of the Act and made addition of Rs. 13,02,000/- by estimating annual rent of the impugned 16 shops a....
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.... CIT(A) that the property was actually let out in the financial year 2006-07 to M/s. IUBI Home finance Ltd. at an actual rental value of Rs. I2.600/- per month i.e. Rs. I.5I.200/- per annum. During the year relevant lo assessment year 2009-10 in appeal, the assessee could not let out the property and thus remained vacant throughout the year. Therefore, the surrounding circumstances would suggest that the property was always available to be let out, however, could not be actually let out in reality. The intention lo let out the property is thus loud and clear in the circumstances which did not however fructify. 8. The AI.V of properly remaining vacant for the whole year has to be computed with reference to section 23(1 )(c) of the Act. This sub-section deals with a situation where the property remains vacant for the whole \ear, Section 23( I )(c) of the Act as relevant in the context is set out for ready reference as under : - " Annual value how determined. 23. ( I ) for the purposes of section 22. the annual value of any property shall be deemed to be- (c) where the properly or any part of the property is let and was vacant during the whole or an\ part of the previous s....