MS. ABHA JHOL,BANGALORE vs. ASST. COMMISSIONER OF INCOME TAX, BANGALORE

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ITA 2050/BANG/2016Status: DisposedITAT Bangalore23 February 2017AY 2009-103 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that if a property is vacant for a period, the actual rent received is to be taxed, and rent for the vacancy period cannot be subjected to tax. Therefore, the addition made by the AO was deleted.

What were the facts?

The assessee claimed a house property loss. The Assessing Officer (AO) treated the property as deemed let out for 11 months when it was vacant and made an addition. The assessee argued that only actual rent received should be taxed as per Section 23(1)(c).

What were the issues?

Whether the AO was correct in deeming a vacant property as let out for the entire period and making an addition, or if only the actual rent received should be considered for taxation.

Which sections of the Income-tax Act were involved?

Section 23(1)(c),Section 23(1)(a)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC - B” BENCH : BANGALORE

Before: SHRI A.K. GARODIA

For Appellant: Ms. Rajeswari S., CA
For Respondent: Shri A.R.V. Sreenivasan, JCIT(DR)
Hearing: 16.02.2017Pronounced: 23.02.2017

Date of hearing : 16.02.2017 Date of Pronouncement : 23.02.2017 O R D E R

Per A.K. Garodia, Accountant Member

1.

This is an assessee’s appeal directed against the order of the ld. CIT (Appeals) -5, Bengaluru dated 11.08.2016 for the assessment year 2009-10.

2.

The grounds raised by the assessee are as under:-

“1. The learned CIT(A) erred in law and on facts in confirming the disallowance Rs. 1,54,000/- of of house property loss by considering house property as deemed let out, such disallowance is requested to be deleted.”

3.

It is submitted by the ld. AR of assessee that as per page No.89 of PB, lease agreement is dated 23.03.2009 and before that, the property was lying vacant but the AO has held that this contention of assessee is not acceptable and he has made addition in respect of those 11 months period from April, 2008 to Feb. 2009 by holding that property is deemed to be let out during this period also. He submitted

Page 2 of 3 that as per provisions of section 23(1)(c) of the Income-tax Act, 1961 [“the Act”], in case of let out property, actual rent received or receivable is to be taxed if the property was vacant during the whole or part of the previous year and because of such vacancy, the actual rent received or receivable is less than the amount for which the property might reasonably be expected to let from year to year, as per section 23(1)(a) of the Act.

4.

The ld. DR of revenue supported the orders of authorities below.

5.

I have considered the rival submissions. I find that it is not in dispute that property was let out and the same was vacant from April, 2008 to Feb. 2009 and therefore, as per the provisions of section 23(1) (c) of the Act, the actual rent received by the assessee is to be subjected to tax and rent for the vacancy period during April, 2008 to Feb. 2009 cannot be subjected to tax. In this view of the matter, the addition made by the AO is deleted.

6.

In the result, the appeal of assessee is allowed.

Pronounced in the open court on this 23rd day of February, 2017.

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