TaxTMI 
TaxTMI 
2019 (5) TMI 1943
X X X X Extracts X X X X
X X X X Extracts X X X X
....(A) has erred in confirming the addition of Rs.1,84,303/- being deemed rental income for a let out property which has remained vacant. The addition has been made in disregard of provision of section 23(1)(c) of the I.T. Act, 1961." 4.1. The undisputed fact is that the premise was vacant throughout the year. The issue before me is as to whether under such circumstances the Assessing Officer was right in disallowing vacancy disallowance claimed by the assessee. This issue is no more res-integra. The Pune Bench of the ITAT in the case of Shri Vikas Keshav Garud vs. ITO, ITA No. 747/PN/2014 order dt. 31/03/2016, has considered the issue and held as follows:- "7. We have carefully considered the orders of the authorities below and material placed on record. We observe that the Assessing Officer has denied the application of section 23(1)(c) of the Act for determination of ALV on the ground that clause (c) does not apply to a situation 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. As per the Assessing Officer, words "where the property is let" cannot be read as "where....
X X X X Extracts X X X X
X X X X Extracts X X X X
....accounting regularly employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him."[underline is ours] 9. Section 23(1)(c) by its literal wording include a situation where a property which was vacant during the whole year by saying that "when a property is let and was vacant during the whole or part of the previous year actual rent received or receivable by the owner is less than sum referred to in clause (a), the amount so received or receivable". It goes without saying that a situation cannot co-exist wherein the property is let during the previous year and is also simultaneously vacant for the whole year. The word 'let' and 'vacant' are mutually exclusive. To appreciate it further, the underlying principle of this provision has to be viewed with regard to the intention together with efforts put by assessee in letting out the property, etc. and then gross annual value is required to be determined. If the assessee intended to let the property and took appropriate efforts in letting the property but ultimately failed to let the same, the actual rent received from it will have to be considered as "Zero" being l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Court in the case of Vivek Jain vs. Asstt. CIT 337 ITR 74. This judgment was prior to the amendment brought in the Act on this issue. 5. In view of the above discussion, consistent with the view taken by the Pune Bench of the ITAT in the case of Shri Vikas Keshav Garud vs. ITO (supra), we delete this addition. 6. Ground No. 2, is against the addition made u/s 2(22)(e) of the Act. 6.1. After hearing rival contentions, I find that the accounts of the assessee in the books of M/s. Panchdeep Constructions Ltd. is placed page 11 of the paper book filed by the assessee. A perusal of the same demonstrates that, it is a current account. Entries were passed on the last day of the previous year i.e., 31/03/2013. Even the Director's remuneration has been credited on the last day of the Financial Year. In the case of Mr. Purushottam Das Mimani vs. Dy. Commissioner of Income Tax in IT(SS)A Nos.60 to 62/Kol/2011, order dt. 17-10-2014, the Tribunal from para 4 onwards held as follows:- "4. We have heard rival submissions and gone through facts and circumstances of the case. We have gone through the facts of the case and found from the perusal of ledger account of assessee in the books of acc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom the facts narrated above, it is clear that both the parties are beneficiary of the transaction being current account of the above transactions i.e. shifting balances. This issue has been answered by Hon'ble Calcutta High Court in the case of Pradip Kumar Malhotra v. CIT 338 ITR 538 (Cal) wherein Hon'ble High Court held as under: "The phrase "by way of advance or loan" appearing in sub-clause (e) of section 2(22) of the Income-tax Act, 1961, must be construed to mean those advances or loans which a shareholder enjoys simply on account of being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate ín profits) holding not less than ten per cent. of the voting power; but if such loan or advance is given to such shareholder as a consequence of any further consíderation which is beneficial to the company received from such a shareholder, in such case, such advance or loan cannot be said to be deemed dividend withín the meaning of the Act. Thus, gratuitous loan or advance given by a company to those classes of shareholders would come within the purview of secti....