TaxTMI 
TaxTMI 
2018 (1) TMI 805
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....ons of Section 22 read with Section 23 of the Act and accordingly the notional annual letting value was taxable in the hands of the Assessee under the heads"Income from House Property" 3. The assessee's contention that since the flats/spaces occupied by it, were for the purposes of its business (the profits of which were chargeable to the Income Tax under profits and gains of business and profession), no notional annual letting value could be assessed/charged to tax under Section 23 of the Act, was rejected by the ITAT, relying on the decision of this Court dated 31.10.2012 in the assessee's own case ITA No. 18/1999 titled CIT Delhi versus M/s Ansal Housing Fin. Leasing Limited and other connected appeals. The ITAT noticed that the Assessee's claim that its property was stock- in- trade under the head "Income from Business", had been decided against it. 4. The ITAT also noticed that the Division Bench by judgment 26.07.2016 in the assessee's case for AY 1994-95 reported at 389 ITR 373 had rejected the reliance placed by the assessee on the decision of the Supreme Court in the case of Chennai Properties & Investments Limited versus CIT, (2015) 373 ITR 673 SC on the ground that....
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.... Even if we interpret it so, it may lead to undesirable result because in some cases, if the owner has let out a property for one month or for even one day, that property will acquire the status of let out property for the purpose of this clause for the entire life of the property even without any intention to let it out in the relevant year. Not only that, even if the property was let out at any point of time even by any previous owner, it can be claimed that the property is let out property because the clause talks about the property and not about the present owner and since the property was let out in past, it is a let out property although, the present owner never intended to let out the same. In our considered opinion, it is not at all relevant as to whether the property was let out in past or not. According to us, 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 were made to let it out, that property is covered by this clause 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. W....
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....of is in excess of the sum referred to in Clause (a), the amount so received or receivable shall be the actual value of the property. While the situation to which Clause (a) relates is where the property has not been let out, (for it is in such an event alone would the question of the sum for which the property might reasonably be expected to be let from year to year arise), the situation to which Clause (b) relates is when the property, or any part thereof, has been let out. Clause (b) does not relate to a situation where the rent actually received, or receivable, is less than the sum for which the property may reasonably be let from year to year. While the pre-amended Section 23 did not provide for such an eventuality, Section 23 was amended by Finance Act, 2001 with effect from 01.04.2002, and Clause (c) was inserted to Section 23(1) to deal with such a situation. Section 23 of the Income Tax Act, which fell for consideration in The Liquidator of Mahamudabad Properties Private Limited v. The Commissioner of Income Tax, West Bengal-II, Calcutta (1980) 3 SCC 482, was as it stood prior to its amendment by Finance Act, 2001 with effect from 01.04.2002. The assessment year, in the pr....
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.... vacant for a part of the year, but the actual rent received, or receivable during the year is higher than the ALV. 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 is less than the ALV, the sum so received or receivable shall be the annual value. In case the actual rent received or receivable during the year is less than the ALV, but not because of vacancy, it is the ALV which shall be taken to be the annual value. (emphasis supplied) 9. The effect of the amendment has been succinctly explained in Sampath Iyengar's Law of Income Tax (10th edition) as under: .... The new section provides that the higher of the amount as between what is actually received or receivable and the annual value in relation to what the property might reasonably fetch if let from year to year would be adopted as annual value for purposes of determination of property income. In the result, even where the property is vacant for part of the year, if the rent received for the remaining part is higher than the annual value, it is such annual value ....
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....ivable 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 year. As a legal fiction is created the word "actually", as used in Section 23(3)(c), does not find mention in Section 23(1) of the Act. 12. The construction placed on Section 23(1)(e), by Sri B. Chandrasen Reddy, Learned Counsel for the Petitioner, that if there is an intention to let out the property during the relevant year, coupled with efforts being made for letting it out, it must be held the property is let, would necessitate reading words into Section 23(1)(c) which do not exist. The words "where the property is let" cannot be read as "where the property is intended to be let". Provisions of a tax statute must be strictly construed. The words ....
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.... 16. We find 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 self-occupation from the ambit of the said clause. As noted hereinabove, Section 23(2)(a) takes out a self-occupied residential house, or a part thereof, from the ambit of Section 23(1) of the Act. Likewise, under Section 23(2)(b), where a house cannot actually be occupied by the 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) of the Act. 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 by the owner for his residence, or which are kept vacant on account of the circumstances mentioned in Clause (b) of Section 23(2), fall outside the ambit of Section 23(1) provided they are, as stipulated in Section 23(3)(a), not ....