TaxTMI 
TaxTMI 
2022 (6) TMI 894
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....ver, held that the rental income of the property commenced on 01.02.2016 itself and has brought the corresponding amount of lease rental receivables from M/s.IBIBO Group Private Limited for the period 01.02.2016 to 31.03.2016. The relevant observation of the A.O. are as follows:- "During the F.Y. 2015-16 relevant to AY. 2016-17, the Assessee has purchased two immovable properties namely 1st and 2nd half of 2nd floor in Tower B1, Golden Enclave, Kodihally Village, H. A Sanitary Board, Bangalore. The Assessee along with M/s Economic Transport Organization Ltd. and Shri Vardhan Arya has entered into a lease agreement with M/s IBIBO Group Pvt. Ltd. on 01.02.2016 for renting out Tower B1, Golden Enclave. As per the said agreement, total rent for the leased commercial premises is Rs.11,70,840/- and out of the total rent, a sum of Rs.3,73,800 is payable to the share of the Assessee. Hence, it is clear that the Assessee was in receipt of rental income of Rs. 3,73,800 pm for the month of February and March 2018 but the same has not been offered to tax in ITR filed for AY. 2016-17. Therefore, income of Rs.7,47,600/- is now added back to the returned income." 4. Aggrieved, the ass....
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....tatement along with copy of the return filed for the assessment year 2016-2017, copy of the lease agreement, copy of the confirmation letter, written submission filed before the CIT(A), etc. The assessee has also filed a paper book enclosing therein the compilation of case laws relied on. The learned AR reiterated the submissions made before the Income Tax Authorities. On a query from the Bench, it was submitted that in the hands of the co-owner, there is no addition made u/s 23(1)(c) of the I.T.Act. 6. The learned Standing Counsel supported the order of the CIT(A). 7. I have heard rival submissions and perused the material on record. The property was let out on 01.02.2016, however, the rent commenced from 01.06.2016. It is clearly mentioned in the lease deed that the rent commencement date shall be the date of handing over the physical possession of the fully fitted out and operational possession of the property. Section 23 of the I.T.Act was substituted with effect from 01.04.2002 by Finance Act, 2001 for and from assessment year 2002- 2003. The case laws relied on by the learned CIT(A) are all pertaining to assessment years prior to 01.04.2002. Subsequent to the substituti....
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.... assessee. The vacancy of the house was beyond the control of the assessee and therefore the benefit of vacancy is available to the assessee as per the provisions of section 23(1)(c) of the Act. It is pertinent to note that even otherwise it may not be always possible to let out the property just after its acquisition or its readiness to be occupied. The process of letting out may take some time in searching the suitable tenant and for settling the terms and conditions of the letting out. Therefore even if it is presumed that the house was ready for occupation if it is not intentionally kept vacant by the assessee then it cannot be presumed that the assessee has deliberately not let out the house during the year under consideration. The co-ordinate bench of this Tribunal in the case of Shakuntala Devi (supra) has considered an identical issue in para 8 as under : "8. We have considered the submission of both the parties and carefully gone through the material available on record. In the present case, it is not in dispute that the properties in question were earlier let out but remained vacant and could not be let out for the year under consideration since those were inhabi....
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....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 to what would be the correct and workable interpretation of the words 'property is let' in clause (c) of section 23 (1). For this, it is to be determined as to whether actual letting out is a must for a property to fall within the purview of clause (c) of section 23(1). [Para 15] From a reading of the provisions of sub-section (3) of section 23, it appears that the Legislatures in their wisdom have used the words 'house is actually let'. This shows that the words 'property is let' cannot mean actual letting out of the property because had it been so, there was be no need to use the word 'actually' in subsection (3) of section 23. Regarding the scope of referring to actual letting out in preceding period, there was no force in the contention of the revenue, as the Legislature has used the present tense. Even if it is interpreted so, it may lead to undesi....
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....and under these circumstances, this property could be called to be let out property in terms of observations made in foregoing paras. Since the property had been held to be let out property, its annual letting value could only be worked out as per clause (c) of section 23 (1) and since the rent received or receivable from the said property during the year was nil the same was to be taken as the annual value of the property in order to compute the income from house property. [Para 18] " 11.1 In our opinion the aforesaid referred to case is on the same facts, so respectfully following the decision of the coordinate Bench in the case of Premsudha Exports (P.) Ltd. vs. ACIT, C.C.-I0,Mumbai (supra), we are of the view that since the rent received or receivable from the property in question during the year was nil, the same was to be taken as the annual value of the property in order to compute the income from house property as provided in section 23(1)(c) of the Act. We, therefore, set aside the order of the learned CIT(A) and the grounds of appeal Nos.5, 6 & 7 raised by the assessee are allowed." In the present case, the facts involved are similar to that of Smt. Indu....
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....lat of the assessee which was let out and whose rent has been offered and accepted for taxation. In this factual scenario, the authorities below have doubted the veracity of these letters and doubted the credentials of the assessee's claim. In our considered opinion, this does not display application of mind to the facts of the case. The assessee is a well renowned cricketer. He is furnishing the return of income of Rs.61,23,14,400/-. The let out value of the property in dispute is assessed as only Rs.1,26,000/- by the ld. Commissioner of Income Tax (Appeals) as rent for the whole year. When the same builder has helped the assessee to find tenant for another flat, why his letters to the same builder to help him identify one more tenant, can be considered as fake, defies logic. That the assessee should maintain a dispatch register for his letters as expected by the authorities below, is also abnormal expectation. That the assessee should get stamped receipt from the builder for the receipt of his letters, is equally quixotic proposition. In these circumstances, the insinuation that the assessee has submitted bogus and fake documents to support the case that reasonable efforts were m....
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....case of the assessee in this appeal stands on better footing, inasmuch as, the property was actually been let out during the relevant financial year. Hence, I am of the view that the applicable section is 23(1)(c) of the I.T.Act instead of section 23(1)(a) of the I.T.Act invoked by the CIT(A). Since the lease rental received for the relevant assessment year being `Nil', the same has to be adopted instead of ALV as ordered by the CIT(A). Further, the lease rental received by the assessee from 01.06.2016 was disclosed under the head "income from house property" for the subsequent assessment year, namely, A.Y. 2017-2018 onwards. For the aforesaid reasons, I delete the addition made by the CIT(A). It is ordered accordingly. 8. Therefore, grounds 2 to 5 are allowed. Addition under the head "other sources" 9. The A.O. made an addition of Rs.2,89,211 by observing as under:- "During the F.Y. 2015-16 relevant to AY. 2016-17, the Assessee has earned dividend income of Rs.62,905/- and interest on PPF of Rs 11,059/- and claimed as exempt. The Assessee has also offered negative income of Rs. 96,208/- under head income from other sources after claiming deduction of Rs. 2,89,211....