LOVE KUMAR KHOSLA,DELHI vs. JCIT, RANGE-72, DELHI

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ITA 4739/DEL/2017Status: DisposedITAT Delhi13 July 2021AY 2013-146 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessee is entitled to vacancy allowance for the period the property remained vacant, as per Section 23(1)(c) of the Act. The AO was directed to allow this allowance on the determined ALV.

What were the facts?

The assessee declared rental income from a property, claiming a 30% deduction. The Assessing Officer (AO) re-determined the Annual Letting Value (ALV) and made an addition. The assessee accepted the revised ALV but argued for vacancy allowance.

What were the issues?

Whether the assessee is entitled to vacancy allowance when the property remained vacant for a part of the year, despite accepting a revised Annual Letting Value.

Which sections of the Income-tax Act were involved?

Section 23,Section 24

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI

Before: SH. N. K. BILLAIYA & SH. MAHAVIR PRASAD

Hearing: 13/07/2021Pronounced: 13/07/2021

This appeal by the assessee is preferred against the order of the CIT(A)-21, New Delhi dated 26.04.2017 pertaining to A.Y. 2013-14.

2.

The revised grounds of appeal are as under :-

3. Before us, at the very outset, the counsel stated that he would be pressing only ground No.5 with its sub ground 5.1.

4. On such concession all other grounds are dismissed as not pressed.

5. The underlying facts in the surviving ground are that during the course of scrutiny assessment proceedings the AO noticed that assessee has shown income from house property from renting out of property at DLF city, Gurgaon and has declared annual rental value u/s.23 of the Act at Rs.34,18,726/- and claimed deduction @ 30% u/s.24 (a) of the Act amounting to Rs. 10,25,618/-.

6.

Assessee was asked to furnish the rental details. The details were furnished and it was explained that during the year under consideration the assessee had let out this property on a monthly rental of Rs.4.30 lacs which was to be increased by 5% from 06.08.2012. It was further explained that the tenant vacated the property in October, 2012 and the property remained vacant till 04.03.2013 and thereafter the premises was let out on a monthly rent of Rs. 4,00,000/-.

7.

The AO was of the firm belief that if the property had been occupied by the tenants from the entire year the assessee would have received Rs.52,84,926/- and this should be the ALV of the property. The AO took the ALV of Rs.53,32,000/- being monthly rent of Rs.451500/- and after allowing deduction u/s. 24(a) of the IT Act @ 30% made the addition of Rs.13,39,296/-.

8.

Assessee carried the matter before the CIT(A) but without any success.

9.

Before us the counsel for the assessee fairly conceded to the determination of the ALV at Rs.53,32,000/-. But vehemently stated that the assessee is entitled for vacancy allowance as per the provisions of section 23 (1)(c) of the Act.

10.

Per contra the DR strongly supported the assessment order.

11.

We have given a thoughtful consideration to the orders of the authorities below. Since the ALV has been accepted at Rs.53,32,000/-, all that has to be seen is whether the assessee is entitled for vacancy allowance. The undisputed fact is that property remained vacant from October, 2012 to 04.03.2013.

This clearly attracts the provisions of section 23 (1) (c) of the Act wherein it has been provided that if the property is let out and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received by the owner in respect thereof is less than same referred to in clause a of section 23 (1) of the Act.

12.

The undisputed fact is that the assessee was receiving a monthly rent of Rs.4.30 lacs and the tenant vacated the property and the property remained vacant from October 2012 to March, 2013 and thereafter the property was again let out for a monthly rent of Rs. 4 lacs. This means that now the properties rent which is less than the previous rent.

13.

Considering the facts in totality we are of the considered view that the assessee is entitled for vacancy allowance for a period October, 2012 till 04th March, 2013 and we direct the AO to allow the vacancy allowance on the ALV determined by him.

14.

Needless to mention the assessee is also entitled for the statutory deduction @ 30%.

15.

In the result, the appeal of the assessee is allowed as per above directions.

16.

Decision announced in the open court in the presence of both the representatives on 13.07.2021.

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