TaxTMI 
TaxTMI 
2024 (7) TMI 89
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....fore, the addition made by the A.O. u/s 23(1)(a) was not justified in law. 2. The learned CIT(A) failed to appreciate that the impugned property was let out in the earlier years and this fact was also categorically accepted by A.O. in paras 4.1, 4.2, 4.6 and 4.7 of the asst. order and therefore, even if it is assumed that the said property was vacant for the whole of the current year, still the provisions of section 23(1)(c) were attracted in view of the law laid down by Hon'ble ITAT, Pune in M/s. Classic Citi Investments Pvt. Ltd. [ITA No.435 & 436/PUN/2023] dated 21.09.2023 and other judgments and therefore, the addition made u/s 23(1)(a) was not justified. 3. Without prejudice, if ground no. 2 is not allowed, the assessee submits that the impugned property was let out for a period of 15 days from 01.04.2016 to 15.04.2016 during the current year and the said fact was substantiated by documentary evidences furnished by the appellant and therefore, the provisions of section 23(1)(c) were applicable on facts of the present case and hence, the addition made by A.O. by applying the provisions of section 23(1)(a) was not justified in law. 4. Without preju....
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....tion) were given along with documents, namely (i) a confirmatory certificate from the tenant Mr. Himansu B Dave; (ii) letter from Mall management confirming the fact of leasing out the said premise to Mr. Dave. It was also stated that the entire rent of Rs. 60,000/- in cash (Rs. 30,000/- pertaining to AY 2016-17 and Rs. 30,000/- pertaining to AY 2017-18) were declared in the return for AY 2017-18 for tax. Copies of advertisement published in Times of India on 16.08.2016 and Gujarat Samachar on 22.08.2016 for leasing out of the property were also submitted. The advertisement expenses of Rs. 45,200/- have suo-moto been offered to tax by the assessee. 3.2 The Ld. AO perused/analyzed the above contention of the assessee. In para 4.1 of the assessment order, the Ld. AO observed that Mall was not let out in FY 2016-17 (AY 2017-18) for the first 15 days of the year. In para 3.2 in AY 2016-17 and in para 4.1 in AY 2017-18 the Ld. AO stated that in all the earlier years the assessee has given the Mall on rent only after making registered rent agreement with tenant having lock in period. The assessee had also taken advance rent and deposit from the tenants. Now no deposit or advance is ta....
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....,83,945/- which he added to the income of the assessee under the head 'income from house property'. Accordingly, the Ld. AO completed the assessment for AY 2016- 17 on 26.12.2018 and for AY 2017-18 on 15.12.2019 on total income of Rs. 2,15,53,035/- and Rs. 96,15,704/- u/s 143(3) of the Act including therein the impugned addition of Rs. 52,83,945/-, respectively. 4. Aggrieved, the assessee filed appeal before the Ld. CIT(A) for both the AYs. It was the common contention of the assessee that the property under consideration was let out in the earlier years and was also let out for a period of 15 days from 16.03.2016 to 31.03.2016 in AY 2016-17 and for a period of 15 days from 01.04.2016 to 15.04.2016 in AY 2017-18. The assessee was not able to let out the said property during the remaining part of the year(s) in spite of making efforts for letting out the same and therefore, the property was vacant for part of the year. Accordingly it was claimed that the annual value of the said property has to be worked out as per the provisions of the section 23(1)(c) of the Act and thus, annual value for the period for which the property was vacant ought to be considered at Rs. Nil. 4.1 The....
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....t the impugned addition is not warranted on facts as well. The Ld. AO rejected the claim of the assessee on the basis of suspicion and surmises. 5. The Ld. CIT(A) only dittoed the order of Ld. AO and confirmed the impugned addition in both the AYs which has brought the assessee before the Tribunal and all the common grounds for AYs 2016-17 and 2017-18 relate thereto. 6. The Ld. AR submitted that during the course of assessment proceedings, it was explained that during the AY 2016-17 the assessee could let out the impugned property in the Mall only for a period of 15 days from 16.03.2016 to 31.03.2016 for exhibition purposes on a rental of Rs. 30,000/-. The property was let out from 16.03.2016 to 15.04.2016 for an exhibition on total rent of Rs. 60,000/-. Prior to 16.03.2016, the impugned property could not be rented out in spite of substantial efforts and hence, the said property remained vacant for a substantial period during this year. This claim was substantiated by filing copies of Newspaper Advertisement published by the assessee for letting out the commercial premises. In view of the above facts, it was claimed that the ALV of the property had to be considered as Rs. Ni....
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.... the facts of the assessee are different from those of M/s. Classic Citi Investments Pvt. Ltd. (supra) as in assessee's case the entire Mall was not let out and remained vacant. The Ld. DR placed reliance on the decision of ITAT Pune in the case of Mr. Arihant Patni and Smt. Shruti Patni Vs. ITO, a copy of which was placed before us. 8. We have considered the rival submissions and perused the records. 9. Let us first resolve the dispute on fact. The undisputed fact is that the assessee is owner of the property 'Dev Arcade Mall', Ahmedabad. It is also not in dispute that the assessee has given the Mall on rent in all the earlier years (as cited by the Ld. AO in para 3.2 of assessment order for AY 2016-17) and more specifically in para 3.4 wherein the Ld. AO stated that the assessee has given the property on rent to Cinemax Ltd. @ 9,77,720/- per month in FY 2008-09; 8454 Sq. Ft. to Ozone Entertainment Pvt. Ltd. @ 26.80/- per Sq. Ft. in FY 2011-12 and 2000 Sq. Ft. to Quick Carrier @ 13.40/- per Sq. Meter in FY 2014-15. 9.1 Before the Ld. AO during the assessment proceedings, the assessee submitted that out of property admeasuring 22622 Sq. Ft. he had given on rent property ad....
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....of the above submissions/contentions could be controverted by the Ld. DR by bringing on record any adverse material. The Revenue has disbelieved the evidence of certificate of tenant and Mall Manager without going into the genuineness or otherwise thereof. Enquiry could have been conducted but it was not done. 9.5 Having regard to the evidence available in the records, we are of the considered view that the Ld. AO/CIT(A) were not justified in holding that the property was not actually leased out during 16.03.2016 to 15.04.2016. Their view is solely based on suspicion and surmises. The law is settled. However strong suspicion may be, it can never partake the character of evidence. Having accepted the rental income offered to tax by the assessee in his income tax return, the Ld. AO/CIT(A) cannot deny that the property was leased out in both the AYs, though for short period. 9.6 Accordingly, we hold that it is factually correct that the property under consideration was let out in both the AYs presently involved. 10. Now, let us come to the legal provision. Section 23(1)(c) of the Act reads as under : "23. Annual Value how determined - (1) For the purposes of....
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....f the current year i.e. if was vacant for the whole year, then provisions of section 23(1)(c) are not attracted. The Ld. AR argued that this interpretation placed by the Ld. AO is directly contradictory to the clear wordings of section 23(1)(c). If the legislature intended so, it would never have used the words "was vacant during the whole or any part of the previous year" in section 23(1)(c). Thus, the interpretation adopted by the Ld. AO, shall render the word "whole" used in section 23(1)(c) as otiose or redundant and hence, such an interpretation which goes against the plain language of the provision may be avoided. We find merit and substance in the above argument of the Ld. AR. 13. As stated earlier, the admitted position is that the impugned property of the assessee was let out in the earlier years. The Ld. AR has contended that assuming without admitting that the property remained vacant for whole of the current year (as held by the Ld. AO), even then the annual value of such property has to be taken as Nil by invoking the provisions of section 23(1)(c). He relied upon the decisions referred to by us earlier in para 6.2 of this order. Nothing adverse has been commented b....