TaxTMI 
TaxTMI 
2018 (9) TMI 1687
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.... as Nil under section 23(1)(c) of the Act. 2. The learned Assessing officer further erred in adopting deemed rent received of Rs. 81,99,360/- as per last year in respect of office premises at Balaji Bhavan when during the previous year the said premises was lying vacant while computing Annual Value. 3. The learned Commissioner of Income tax (Appeals) erred in confirming the action of the learned Assessing Officer in calculating profit on sale of two office units under the head Short Term Capital Gain amounting to Rs. 35,32,544/- as against declared by the appellant as business income of Rs. 23,92,799/-." 2. Briefly stated, the assessee company which is engaged in construction business had filed its return of income for A.Y 2011-12 on 25.09.2011, declaring Nil income. Subsequently, the case of the assessee was taken up for scrutiny assessment under Sec. 143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the 'balance sheet' of the assessee revealed investments of Rs. 3,54,81,980/- in immovable properties on 01.04.2010. On being called upon to explain that as to why the deemed rental income of the aforesaid properties may no....
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....the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorised representative (for short 'A.R') for the assessee, at the very outset of the hearing of the appeal submitted that the Ground of appeal No. 3 was not being pressed by him. In the backdrop of the concession of the ld. A.R the Ground of appeal No. 3 is dismissed as not pressed. The ld. A.R took us through the facts of the case and drew our attention to the relevant observations of the A.O and that of the CIT(A) in context of the issue under consideration. The ld. A.R took us through Para C of the 'Leave and License agreement', dated 22.04.2007 (Page 149) of the assessees 'Paper book' (for short 'APB'). On a perusal of the aforesaid extract of the agreement, it emerged that the property under consideration viz. Unit No. 401 & 425 of project Balaji Bhavan was given by the assessee on leave and license basis for a period of 36 months commencing from 10.04.2007, and the same thereafter was renewable for a further period of 24 months with an enhanced license fees of 25%. It was submitted by the ld. A.R that a perusal of the agreement revealed that the assessee had intended to let out the property even fo....
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....erred in concluding that the provisions of Sec. 23(1)(c) would not be applicable for determining the 'annual value' of the property under consideration, thus, his order may be set aside. 6. Per contra, the ld. Departmental representative (for short 'D.R') relied on the orders of the lower authorities. It was submitted by the ld. D.R that as the property under consideration viz. Unit No. 401 & 425 of project Balaji Bhavan had remained vacant during whole of the year under consideration, thus, the lower authorities had rightly concluded that the provisions of Sec. 23(1)(c) would not be applicable and had rightly determined the 'annual value' by pressing into service Sec. 23(1)(a) of the 'Act'. 7. We have heard the authorised representatives of both the parties, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the present appeal has been sought for adjudicating as to whether the 'annual value' of the property owned by the assessee viz. Unit No. 401 & 425 of project Balaji Bhavan, had rightly been determined by the assessee by taking recourse to Sec. 23(1)(c) of the 'Act' at Rs. Nil, or the same was liable to be determin....
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....cated as on 04.12.2008, the same thereafter remained under the self occupation of the assessee. That in light of the aforesaid factual position in the case of the present assessee, we find ourselves to be in agreement with the submissions of the Ld. A.R. that the issue raised before us for adjudication is squarely covered by the order of the coordinate bench of the Tribunal in the case of : Premsudha Exports (P) Ltd. Vs. ACIT (2008) 110 ITD 158 (Mum), wherein the Tribunal had therein held : "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. We feel that the words 'property is let' are used in this clause to take out those properties from the ambit of the clause in which properties are held by the owner for selfoccupation i.e self occupied property (i.e SOP) because even income on account of SOP, excluding one such SOP of which annual value is to be adopted at nil, is also to be computed under this head as per Clause (a) of Section 23(1) if we see the co....
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....self occupied properties are to be determined in terms of Sec. 23(1)(a) of the 'Act'. Thus to our understanding the term 'Property is let' used in Sec. 23(1)(c) is solely with the intent to avoid misuse of determination of the 'ALV' of self occupied properties by the assesses by taking recourse to Sec. 23(1)(c), however the same cannot be stretched beyond that and the 'ALV' of a property which is let, but thereafter remains vacant for the whole year under consideration, though subject to the condition that the same is not put under self occupation of the assessee and is held for the purpose of letting out of the same, would continue to be determined u/s 23(1)(c) of the 'Act'. Thus in light of the aforesaid order of the coordinate bench of the Tribunal and the reasonings flowing there from, we are of the considered view that the assessee in the present case had rightly determined the 'ALV' of the property at Rs. Nil by taking recourse to Sec. 23(1)(c) of the 'Act'. In this regard we are further of the view that the CIT(A) had misconceived the judgment of the Hon'ble High Court of Andhra Pradesh in the case of Vikas Jain (supra), and on a perusal of the said judgment therein find tha....
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....the usage of the term 'Property is let' in Sec. 23(1)(c) had purposively been used to exclude those properties from the ambit of the clause which are held by the owner for self occupation purposes, because even though the 'annual value' of oneself occupied property so chosen by the assessee is taken at Nil, however the 'annual value' of all the remaining self occupied properties are to be determined in terms of Sec. 23(1)(a) of the 'Act'. Thus, to our understanding, though the term 'Property is let' used in Sec. 23(1)(c) is solely with the intent to avoid misuse of determination of the 'annual value' of self occupied properties by the assesses by taking recourse to Sec. 23(1)(c), however, the same cannot be stretched beyond that and the 'annual value' of a property which is let, but thereafter remains vacant for the whole year under consideration, though subject to the condition that the same is not put under self occupation of the assessee and is held for the purpose of letting out of the same, would continue to be determined u/s 23(1)(c) of the 'Act'. Thus, in light of the aforesaid order of the coordinate bench of the Tribunal and the reasonings flowing there from, we are of the....
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....ct of office premises at Balaji Bhavan and further appreciation of 10% while computing Annual Letting Value in the assessment order when during the previous year the said premises was lying vacant. 3. Without prejudice to the above grounds of appeal the learned Commissioner of Income tax (Appeals) erred in not accepting the plea of the appellant that the annual letting value under section 23(1)(a) of the premises at Balaji Bhavan for the vacant period should be computed by adopting the reasonable rent as per the municipal rateable value of the premises." 12. Briefly stated, the assessee company had filed its return of income for A.Y 2012-13 on 29.09.2012, declaring income of Rs. 1,25,34,810/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was taken up for scrutiny assessment under Sec. 143(2) of the Act. 13. During the course of the assessment proceedings it was observed by the A.O that the 'balance sheet' of the assessee revealed investments of Rs. 3,43,36,083/- in immovable properties. On being called upon to explain that as to why the deemed rental income of the aforesaid properties may....