SHRI.LOKNATH,BANGALORE vs. INCOME TAX OFFICER WARD-7(2)(3), BANGALORE

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ITA 476/BANG/2018Status: DisposedITAT Bangalore07 February 2020AY 2014-155 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the property was a let-out property and remained vacant, the assessee was eligible for vacancy allowance as per Section 23(1)(c). The disallowance made by the lower authorities was deemed unjustified.

What were the facts?

The assessee claimed 100% vacancy allowance under Section 23(1)(c) for a house property that remained vacant throughout the assessment year. The property had been let out for several years prior to the current year.

What were the issues?

Whether the assessee is entitled to vacancy allowance under Section 23(1)(c) for a let-out property that remained vacant throughout the year.

Which sections of the Income-tax Act were involved?

Section 23(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH : BANGALORE

Before: SHRI A. K. GARODIA & SMT. BEENA PILLAI

For Appellant: Shri. S. V. Ravishankar, Advocate
For Respondent: Shri. Manjeet Singh, Addl. CIT (DR)(ITAT), Bengaluru
Hearing: 02.01.2020Pronounced: 07.02.2020

Per A.K. Garodia, Accountant Member

1.

This appeal is filed by the assessee and the same is directed against the order of learned CIT(A)-7, Bengaluru, dated 26.10.2017, for Assessment Year 2014-15. The assessee has raised as many as 6 grounds of appeal but the only grievance of the assessee is regarding disallowance of assessee’s claim for 100% vacancy allowance under section 23(1)(c) of the Income Tax Act, 1961.

2.

In the course of hearing, learned AR of the assessee placed reliance on the Tribunal order rendered in the case of Shri Koramangala Munireddy Chandra Vs. DCIT in dated 28.09.2017. He

Page 2 of 5 submitted a copy of this Tribunal order and drawn our attention to para Nos.4 and 5 of this Tribunal order and pointed out that in that case, it is noted by the Tribunal that as per the finding of learned CIT(A) in that case, the property in that case remained vacant since 2011 after previous tenant had vacated the premises and the assessment year involved in that case was Assessment Year 2012-13. It was submitted that in the present case, the submissions of the assessee are reproduced by learned CIT(A) in para 5 of his order as per which, this property was originally let out for several years and entire income was declared as income from house property for many years but in the present previous relevant to Assessment Year 2014-15, the property was vacant through out the year. He submitted that hence, the facts in the present case are identical and therefore, this Tribunal order is applicable and the assessee should be allowed vacancy allowance as prescribed under section 23(1)(c) of the Income Tax Act, 1961.

3.

As against this, learned DR of the Revenue supported the orders of authorities below.

4.

We have considered the rival submissions. First of all, we reproduce para No.5 from the order of CIT(A) to take note of the facts in the present case. This para reads as under:-

Page 4 of 5 5. Now we reproduce para Nos.4 and 5 from the Tribunal order cited by learned AR of the assessee. These paras read as under:-

“4. It was submitted by ld. AR of assessee that in both these appeals, one issue is common i.e. an addition made by the AO of Rs. 36.30 lakhs in each case as notional rent which is raised as per ground no. 4 in and as per ground no. 3 in ITA No. 1275/Bang/2017.Regarding this issue, he submitted that he drawn our attention to Para no. 7.3 of order of CIT(A) where it is noted by CIT(A) that the property has remained vacant since 2011 after the previous tenant has vacated the premises. He submitted that from these facts, it is clear that the property in question in both the cases is a let-out property. He drawn our attention to the provisions of section 23(1)(c) of the I.T. Act, 1961 and submitted that as per this section, if the property is let out and was vacant during the whole or any part of the previous year and owing to such vacancy, actual rent received or receivable is less than the same referred to clause a of section 23(1) of the I.T. Act, 1961 then the amount so received / receivable is taxable. He submitted under these facts, the addition made by the AO and upheld by the CIT(A) should be deleted. Learned DR of the revenue supported the orders of lower authorities.

5.

We have considered the rival submissions. In view of the facts of the present case as per which it is admitted position that the property in question is a let out property and in view of the provisions of section 23(1)(c) of the I.T. Act, 1961, we hold that since the rent received is nil because of vacancy, the addition made by the A. O. is not justified and hence deleted.”

6.

From the submission of the assessee before CIT(A) as reproduced by him in para 5 of his order which is reproduced by us above, it is seen that this is the case of the assessee that the property in question is a let out house property because the same was let out for several years prior to the present year and there is no such finding of CIT(A) that this assertion of the assessee is not correct. In the case of Shri Koramangala Munireddy Chandra Vs. DCIT (supra), the Tribunal has noted in the relevant paras of the Tribunal order reproduced above that property in question in that case was a let out property prior to the relevant Assessment Year and under these facts, it was held by the Page 5 of 5 Tribunal in that case that since the property is let out property, the assessee is eligible for deduction under section 23(1)(c) of the Income Tax Act, 1961 and the same was allowed. In the present case, the facts are similar and hence, respectfully following this Tribunal order, we decide this issue in favour of the assessee.

7.

In the result, appeal of the assessee is allowed.

Pronounced in the open court on the date mentioned on the caption page.

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