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Income Tax Appellate Tribunal, DELHI BENCH : SMC : NEW DELHI
Before: SHRI R.S. SYAL
This appeal by the assessee is directed against the order passed by the CIT(A) on 28.04.2015 in relation to the Assessment Year 2007-08.
Briefly stated, the facts of the case are that the assessee did not declare any income from house property. The Assessing Officer observed that the assessee was in possession of the following three properties:- i) Flat No.83, Block G, Sector-18, Rohini, Delhi 110085 in Data Ram Co-operative Group Housing Society Ltd. – Allotted on 27th October, 2002. ii) House No.35/22, Second Floor, Neta Ji Marg, Kewal Park, Delhi 110033. iii) Flat No.JC 1, first floor, Khirki Extension, Malviya Nagar, New Delhi – Purchased in August 2004.
On being called upon to explain as to why rental income was not offered from the said properties, the assessee tendered the following explanation:-
i) Flat No.83, Block G, Sector-18, Rohini, Delhi 110085 in Data Ram Co-operative Group Housing Society Ltd., Rohini, Delhi. As already clarified in my letter dated 2nd July, 2014 during the period April, 2006-March, 2007, this flat was lying incomplete and was in a shell state, with walls and floors unplastered without any doors and windows. Thus, not in habitable as all. Hence, I submit, it should not be assessed for any rental income accruing to me. ii) House No.35/22, Second Floor, Neta Ji Marg, Kewal Park, Delhi 110033. In regard to this property, as I had already explained in my letters dated 31.05.2011 and again in my letter dated 23.07.2014 that this Flat was a small flat with a total area of approx 41.5 sq meter and was in occupation of my sister Ms Nina Wahi and her husband Ram Wahi ever since this flat was purchased as per Sale Deed dated 09.11.2005 and also during the F.Y. 2006-07. The prevailing monthly rent assessed for the period April, 2006 – March, 2007 appears to be far too high since the flat was far too small and Kewal park was then not fully developed area. iii) Flat No.JC 1, first floor, Khirki Extension, Malviya Nagar, New Delhi. Likewise as clarified in my letter dated 31.05.2011 this flat was purchased in August, 2004 with a small area of approx 250 sq ft consisting of two rooms and had been in occupation of my brother Mr. Suresh Bahal ever since this flat was acquired in August, 2004. My brother, Mr. Suresh Bahal was living in this flat during the period April, 2006 – March, 2007. Here again, I wish to state that the then prevailing market monthly rent during the period (April, 2006 – March, 2007) mentioned appears to have been highly inflated and very much on the high side considering the type of the flat and also since this area was under-developed.”
Not convinced with the assessee’s submissions, the Assessing Officer estimated notional rent by considering the prevailing market rent as under:-
“(i) Rs.1,20,000 p.a (Rs.10,000 p.m.) for Flat in Data Ram Society, Rohini.
(ii) Rs.84,000 p.a. (Rs.7,000 p.m.) for Neta Ji Marg, Kewal Park.
(iii) Rs.1,20,000 p.a. (Rs.10,000 p.m) for Khirki Extn., Malviya Nagar, New Delhi.”
That is how income from the house property was computed at Rs.2,26,800/- after standard deduction.
The ld. CIT(A) upheld the action of the Assessing Officer in estimating the rent in respect of three properties. However, one of the properties, namely, Rohini property, was allowed as self occupied and it was directed that the annual letting value of the other two properties be considered for determining the house property income. The assessee is aggrieved.
I have heard the rival submissions and perused the relevant material on record. In so far as the Rohini property is concerned, it is seen that the assessee furnished evidence that the electricity connection was installed in the year 2013 and, during the year under consideration, namely, financial year 2006-07, the flat was incomplete and lying in a shell state. When a property is itself, admittedly, incomplete and not in a habitable state, it cannot be construed as self occupied property for the purpose of determining income under the head ‘Income from house property.’ On excluding this property, there remains other two properties, namely, house at Malviya Nagar and house at Kewal Park, Delhi. One of these properties, at the option of the assessee is to be considered as self occupied property.
The annual letting value of the remaining third property is to be considered for the purpose of chargeability under the head ‘Income from house property.’ The Assessing Officer is directed to compute the annual letting value of the remaining property, as per law, after allowing a reasonable opportunity of being heard to the assessee.