SUSHAM SINGLA vs. COMMISSIONER OF INCOME TAX, PATIALA (PUNJAB)

ITA/371/2015HC Punjab & HaryanaPHHC01110019201523 December 2016Author: MR. JUSTICE M.M. AGGARWAL,MR. JUSTICE AVNEESH JHINGAN9 pages
AI SummaryDismissed

What were the facts?

The appellant-assessee, Susham Singla, filed seven appeals before the Punjab and Haryana High Court against a common order of the Income Tax Appellate Tribunal (ITAT) for assessment years 2001-02 to 2007-08. These appeals stemmed from additions made to the assessee's income by the Assessing Officer (AO) on account of deemed income from properties owned by the assessee. The AO's action was based on a search conducted on the Jagdish Jeweller Group, to which the assessee was related. The assessee owned multiple properties, including those in New Delhi, Mumbai, and Patiala. The Patiala property was treated as self-occupied. For the other properties, which were not let out and remained vacant, the AO determined notional rent, added it to the assessee's income after statutory deductions. The Commissioner (Appeals) and the ITAT upheld the AO's additions.

What did the High Court hold?

The High Court held that the annual value of properties that are owned by the assessee, are more than one in number, and admittedly remained vacant throughout the previous year, would not be assessed under Section 23(1)(c) but under Section 23(1)(a) of the Income Tax Act, 1961. Section 23(1)(b) and (c) apply only to properties that were actually let out and for which rent was actually received or receivable, dealing with the concept of real income, not notional income. Therefore, the annual value would be determined notionally, as done by the Assessing Officer and upheld by the Commissioner and the Tribunal. The question of law was answered in favour of the Revenue. The appeals were dismissed.

What were the issues?

1. Whether, under Section 23(1)(c) of the Income Tax Act, 1961, where a property is let but remains vacant and the actual rent receivable is less than the expected rent, the annual value should be taken as the actual rent received or receivable, or if the property cannot be realized, should the chargeability be nil? Assessee's contention: The assessee argued that since the properties were not let out and remained vacant, no annual value could be determined under Section 23(4) of the Act. They contended that as per Section 23(1)(c), the annual value of such properties should be taken as 'Nil'. The assessee also initially argued that the AO had fixed the annual value at a high rate without reasonable criteria, but later did not press this point. Revenue's contention: The revenue's contention is implicit in the upholding of the AO's and ITAT's orders, which determined notional rent for vacant properties under Section 23(1)(a) of the Act.

Which sections of the Income-tax Act were involved?

Section 22,Section 23(1)(a),Section 23(1)(b),Section 23(1)(c),Section 23(2),Section 23(4),Section 260-A

AI-generated summary — verify with the full judgment below

I. T. A. Nos. 371 to 377 of 2015 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Case No. : I. T. A. Nos. 371 to 377 of 2015 Reserved On : July 28, 2016 Pronounced On : December 23, 2016 CORAM : HON'BLE MR. JUSTICE S. J. VAZIFDAR, CHIEF JUSTICE. HON'BLE MR. JUSTICE DEEPAK SIBAL. * * * Present : Mr. Pankaj Jain, Senior Advocate with Mr. Sachin Bhardwaj, Advocate and Ms. Divya Suri, Advocate for the appellant(s).

Mr. Rajesh Katoch, Advocate for the respondent(s). * * * DEEPAK SIBAL, J. : The present is a bunch of seven appeals, being I. T. A. Nos. 371 to 377 of 2015, pertaining to the assessment years 2001-02 to 2007-08, respectively, filed at the instance of the appellant-assessee to challenge therein the common order passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as – the Tribunal).

At the time of hearing of the appeals, Mr. Pankaj Jain, learned senior counsel appearing on behalf of the appellant-assessee sought to press only the following substantial question of law

The order continues below.

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