MS. PRIYANANKI SINGH SOOD,NEW DELHI vs. ACIT, NEW DELHI

Aggrieved by order of Ld. CIT (A) assessee is in appeal before us now.

Ld. Counsel submitted that the property under question is a commercial flat at Madras owned by assessee along with her 2 sisters. He submitted that the said property was purchased be back in 1980 and was let out. He submitted that the said property was continuously let out till assessment year 2001-02 and thereafter from assessment year 2002-03 a suitable tenant could not be found and remained vacant. It was thus, submitted by Ld. Counsel that under such circumstances the property has to be considered as per provisions of section 23(1)(c) of the Act. He plays reliance upon following decisions of coordinate benches of this Tribunal: • Preamsudha Exports (P) Ltd., vs. ACIT reported in (2008) 110 ITD 158; • Shakuntala Devi versus DDIT reported in (2000 del) 31 CCH 32 (Bang); • ACIT versus Dr Prabha Sanghi reported in (2012) 139 ITD 504 (Delhi); • Reynaud Shamlal vs. ACIT in wide order dated 21/09/16; 6. Ld. Counsel further submitted that Ld.CIT (A) confirmed addition by relying upon decisions of Hon’ble Andhra Pradesh High Court in case of Vivek Jain vs ACIT reported in (2011) 14 Taxmann.com 146 and Hon’ble Delhi High Court in case of Ram Pershad and Sons vs CIT reported in (1995) 81 Taxmann 332. 6.1 He submitted that decision of Hon’ble Delhi High Court in case of Ram Pershad and Sons vs CIT(supra) is distinguishable on facts, as it was a case where, assessee claimed vacancy allowance on occupied property, which was never been let out in any of preceding assessment years, or even partly during year under consideration. Insofar as decision of Vivek Jain vs ACIT (supra) is concerned, Ld. Counsel submitted that Ld. CIT(A) misconceived the judgment of Hon’ble Andhra Pradesh High Court by placing reliance upon the concluding paragraphs 14 and 15 of the said decision wherein, Hon’ble Court though has concluded that the benefit of computing the ale be under section 23(1)(c) could not 3 be extended to a case where the property was not let out at all, however the same would duly income passed to take within its sweet cases where the property had remained let out for 2 or more years but thereafter had remained vacant for whole of the previous year. He submitted that in fact the decision of Hon’ble Andhra Pradesh High Court is in favour of assessee as in the present facts of the case admittedly the property has remained vacant since assessment year 2002-03 which has been a part of observations recorded by Ld.AO in the assessment order.

On contrary, Ld. DR placed reliance upon orders of authorities below.

We have perused the submissions advanced by both sides and the light of the records placed before us.

In order to attract section 23(l)(c), the following requirements must be fulfilled (i) the property, or any part thereof, must be let; and (ii) it should have been vacant during the whole or any part of the previous year ; and (iii) owing to such vacancy the actual rent received or receivable by the owner in respect thereof should be less than the sum referred to in clause 9.1 It is only if these three conditions are satisfied together, would clause (c) of section 23(1) apply, in which event amount received or receivable, in terms of clause (c) of section 23(1), shall be deemed to be the annual value of the property.

Further, Clause (c) does not apply to situations where property has either not been let out at all during any of the previous years or, even if let out, was not vacant during whole or any part of previous year. Further Under Explanation to section 23(1), for the purposes of clause (b) or (c), amount actually received or receivable by the owner shall not include the amount of rent which the owner cannot realize.

In present facts of case, admittedly property at Chennai in dispute has remained vacant post assessment year 2002-03 till date. It is not the case of revenue that the property after being vacant, remained under self occupation of assessee. It is also not been disputed by the revenue that prior to assessment year 2002-03 the property was not let out.

On a question being posed by the bench to Ld. Counsel regarding view of revenue during interregnum assessment years, Ld. Counsel submitted that there has been no addition made by the authorities during assessment years 2003-04 to 2011-12. Further the submissions of Ld. counsel that assessee has made all efforts to let out the property in dispute.

We are agreed with submissions of Ld. Counsel regarding decision of Hon’ble Andhra Pradesh High Court in case of Vivek Jain vs ACIT (supra) being misconceived by the authorities below. We have perused the said decision and find that Hon’ble High Court held as under: “14. The contention that, as clause (c) provides for an eventuality where a property can be vacant during the whole of the relevant previous year, both situations, i.e., "property is let" and "property is vacant for the whole of the relevant previous year" cannot co-exist does not merit acceptance. Clause (c) encompasses cases where a property is; let out for more than a year in which event alone would the question of if being vacant during the whole of the previous year arise.” 13.1 From the above provision of law, it can be construed that in case the property or part thereof was vacant during the period, the proportion deduction should be allowed from the sum on which the property might reasonably be let out from year to year. We find that it is the plea of the assessee that due to inherent defects, the flat could not be let out. Hence, the flat remained vacant. Hence, the assessee has claimed benefit of section 23(1)(c) which duly permits deduction in this regard. We find that the coordinate bench of this Tribunal in case of Premsudha Exports (P) Ltd. (supra), had occasion to deliberate on identical issue. This Tribunal has observed on a plain reading of section 23(3) that, Legislature in their wisdom used words, 'house is actually let', which shows that words, 'property is let' cannot mean actual letting out of property, because had it to be so, there was no need to use words, 'actually' in section 23(3). It was observed by this Tribunal that, it is not at all relevant as to whether property was let out in past or not. These words do not talk of actual let out, but talk about intention of assessee to let out. If property is held by owner for letting out and efforts are made to let it out, such property will be covered by section 23(1)(c), and this requirement has to be satisfied in each year that property was being held to let out, but remained vacant for whole or part of the year. Thus, if a property is held with an intention to let out in the relevant year coupled with efforts made for letting it out, it could be said that such a property is a let out property and the same would fall within the purview of clause (c) of section 23(1).

In our considered opinion the fact the present case assessee always had the intention of letting out the property at Chennai, post assessment year 2002-03, however, it has been submitted that due to fall in property prices, the same could not be let out year after year because of which disputed property remained vacant. One more relevant factor which we observe is that, assessing officer in any of preceding assessment year, post assessment year 2002-03, has never disputed that the property was not vacant. In fact in assessment order passed for year under consideration, Ld.AO is admitting to the fact that property in question was let out only till assessment year 2002-03 and thereafter it was vacant, even during year under consideration. Under such circumstances, in our considered opinion assessee’s case stands squarely covered by view taken by coordinate bench of this Tribunal in case of Premsudha Exports (P) Ltd. (supra), and benefit under section 23 (1) ( c) has to be granted.