AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1157
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....ellant prays that, on the facts and circumstances of the case, the Ld. AO may be directed to delete the addition made to the total income. 2. (a) The Ld. CIT (Appeal)/The National Faceless Appeal Centre('NFAC') has erred in confirming addition of Rs.. 13,86,000/- as deemed rent in respect of Office premises in self-use as against the contention of your Appellant that the same is not chargeable to tax under section 22 of the Act. (b) Your appellant prays that, on the facts and circumstances of the case, the Ld. AO may be directed to delete the addition made to the total Income. 3. (a) The Ld. CIT(Appeal)/The National Faceless Appeal Centre('NFAC'), in the event the office premises is subject to tax under section 22 of the Act, erred in not considering the said office premises as one of the two property permitted to be considered as self-occupied Hose property and Property at 2. Ruby Villa, AB Bypass Road, Indore, Madhya Pradesh, PIN 452020 be considered as property subject to deemed rent and thereby making an addition of Rs..13,86,000 to the total income as against deemed rent offered by your appellant of Rs.. 2,53,575 (Deemed rent of Ruby ....
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....e benefit of section 23(1)(c) applies even if the property, held with an intention to let out, remains vacant for the whole or part of the year. The CIT(A), however, noted that no corroborative material was filed either before the AO or during the appellate proceedings to substantiate the claim of such efforts. It was also noted that the appellant himself admitted that the confirmations from brokers were not available. The CIT(A), therefore, held that the appellant failed to discharge the onus to establish the intention to let out the property and consequently upheld the AO's addition of Rs.7,43,199/-, dismissing ground no. 1 of the appeal. 5. Regarding the second addition of Rs.13,86,000/-, the Assessing Officer observed that the assessee owned an office premises at Hariom Chambers, Andheri (West), Mumbai, for which no rental income was offered. The assessee contended that the premises were used as an office to manage his investments in the capital market, hence the same was not chargeable to tax under section 22 of the Act. The AO rejected this explanation on the ground that the assessee was not carrying on any business or profession, as reflected in the ITR-2 filed, and hence....
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...., in the earlier assessment years 2019-20 and 2020-21, the assessee had voluntarily offered deemed rental income of Rs.19,70,935/- from these very flats under the head "Income from House Property". During the relevant previous year, i.e., F.Y. 2020-21, the assessee decided to let out the said flats and accordingly engaged real estate brokers to identify suitable tenants. However, due to the COVID-19 pandemic and its economic aftermath, the flats remained vacant throughout the year despite bona fide efforts made to rent them out, and were ultimately sold during the same financial year. Therefore, in accordance with the provisions of section 23(1)(c) of the Act, which provides that where property remains vacant despite efforts to let out, the annual value shall be taken as nil, the assessee rightly considered nil deemed rent for the year under appeal. The Counsel further submitted that both the Assessing Officer and the CIT(A) erred in rejecting the assessee's claim on the sole ground that no documentary evidence of efforts to let out the properties was produced. The ld. counsel for the assessee submitted that the assessee had indeed given a mandate to brokers for renting out the fla....
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.... alter the applicability of this provision. The test of exemption under section 22 is the "use" of the property for business or professional purposes and not the quantum of profit earned therefrom. Therefore, once it is accepted that the office was used for managing investment operations, the same cannot be subjected to deemed rent taxation under section 22 of the Act. Without prejudice to this primary contention, the Counsel submitted that the assessee had alternatively requested the Assessing Officer to consider the office premises at Hariom Chambers as one of the two self-occupied properties permitted under the Act, and consequently, to treat the property at 2, Ruby Villa, Indore, as deemed let out. The Assessing Officer, however, ignored this first alternative and instead adopted the second alternative furnished by the assessee, computing deemed rent at Rs.13,86,000/- based on rent received in subsequent years. The CIT(A) mechanically confirmed the addition, merely observing that the assessee did not have income taxable under the head "Profits and Gains of Business or Profession." The Counsel contended that this finding is legally unsustainable and contrary to the language of s....
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....d to be let out but remained vacant during the year due to the unprecedented situation created by the COVID-19 pandemic and were subsequently sold during the year itself. The assessee had duly offered deemed rental income on the said flats in earlier years, but for the year under appeal, determined the annual value as Nil under section 23(1)(c) of the Act on the ground that the properties, though intended to be let out, remained vacant despite bona fide efforts made to rent them. The authorities below have rejected the assessee's claim merely on the basis that no formal evidence or confirmation from brokers was produced. In our considered opinion, the denial of benefit under section 23(1)(c) of the Act to the assessee is not justified. The said provision provides that where the property remains vacant for the whole or part of the year despite efforts to let it out, the annual value shall be the actual rent received or receivable, which in this case is Nil. The coordinate bench of this Tribunal in Shri Sachin R. Tendulkar v. DCIT-23(3), ITA No. 3755/Mum/2016 (order dated 09.02.2018), has held that the expression "property is let" in section 23(1)(c) includes cases where the property....
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....ional activity in relation to his investment operations. Hence, we find no infirmity in the conclusion drawn by the learned CIT(A) in upholding the addition on this count. Accordingly, Ground No. 2 of the assessee's appeal is dismissed. 11. Coming to Ground No. 3, which is raised in the alternative, the assessee contends that even if the office premises at Hariom Chambers are considered chargeable to tax under the head "Income from House Property," the same ought to be treated as one of the two self-occupied properties, and the property at Ruby Villa, Indore, should be treated as deemed let out. The learned CIT(A) has rejected this contention observing that such an option can be exercised only at the time of filing of the return of income. We find merit in the alternative contention of the assessee. The coordinate bench of the Tribunal in Asha Bhonsle v. ITO (ITA No. 2552/Mum/2010, order dated 21.09.2011) has categorically held that the assessee is entitled to modify the option for choosing a self-occupied property even during the course of assessment proceedings. The Tribunal, after examining the provisions of section 23(4), held that when an assessee has exercised an option wh....