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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SMT DIVA SINGH & SH.O.P.KANT
Date of Hearing 22.06.2016 Date of Pronouncement 21.09.2016 ORDER PER DIVA SINGH, JM The present appeal has been filed by the assessee assailing the correctness of the order dated 26.12.2013 of CIT(A), XXI, New Delhi pertaining to 2008 – 09 assessment year on the following grounds:-
1. “That on facts and in law the CIT(A) erred in determining the ALV of residential house at 15,Chinar Drive, DLF Chattarpur, New Delhi, Lying vacant during the year u/s 23(1 )(a) r.w.s 23(4)(b) of the Income Tax Act, 1961 at Rs. 12,00,000/- as deemed income under the head Income from "House Property" for the reasons stated in the impugned order.
2. That the CIT(A) Failed to consider and appreciate that the Annual Letting Value be determined at Nil in terms of Section 23(1)(c) as declared by the appellant. 3. That the appellant craves leave, to add, alter, amend, forgo, and substitute any or all the grounds of appeal before or at the time of hearing.”
I.T.A .No.-1100/Del/2014
The appeal came up for hearing on 14.06.2016 wherein the Ld.AR filing a synopsis submitted that the issue is covered in favour of the assessee by the orders of the ITAT. Reliance was placed on the copies of the decision already placed on record in the Paper Book filed. Time was sought by the Revenue and the appeal was adjourned to 21.06.2016. On the next date, the Ld.AR again reiterated that the issues are covered by the orders of the ITAT in its favour.
The Revenue again sought a short adjournment and the adjournment was granted.
Accordingly, the appeal again came up for hearing. The Ld.AR relying upon the synopsis filed submitted that the material facts are that the assessee owns the following two residential houses:-
i). DLF Chattarpur, Delhi which till A.Y.2007-08 was let out and during the year under assessment was lying vacant with an intention to let out. ii). The second house at Kasauli (Himachal Pradesh) was under self occupation being used for vacation purposes. 3.1. It was also submitted that the assessee since her marriage in 1979 including the year under consideration has been living with her family members in 17, Birbal Road, New Delhi which is the official address for income tax purposes owned jointly by her husband and mother-in-law. Reference to these facts is found recorded in the assessment order and the impugned order.
It was his submission that the AO invoked the provisions of section 23(1)(a) of the Act r.w.s 23(4)(b) and adopted the annual letting value of residential property situated at 15, Chinar, DLF Chatarpur as Rs.13,20,000/- as against Rs.1 lac per month on which it was let out in the preceding assessment year
I.T.A .No.-1100/Del/2014 and increasing the same at 10% taking per month rent at Rs.1,10,000/-. It was submitted that the fact on record is that the said property in the year under consideration was lying vacant and that the CIT(A) in para 4.2 rejecting the main plea of the assessee that the ALV on the basis of section 23(1)(c) should be at NIL upheld the applicability of section 23(1)(a) r.w.s. 23(4b) and granted part relief by reducing the ALV of residential house at 15, Chinar, DLF Chatarpur lying vacant to Rs.12 lacs as deemed income under the head income of “house property” and upholding the addition to the extent of Rs.8 lacs deleting the balance addition of Rs.40,000/-. In the said background the Ld.AR submitted that there is no dispute on the fact that the said property was lying vacant. The reasons for the property lying vacant it was submitted has all along remained the same, namely that the assessee was making attempts to find another tenant however due to a recession in the property rentals the assessee could not let out the specific property. Accordingly relying upon section 23(1)(c), it was submitted that the ALV should be taken as NIL as against Rs.8 lacs as confirmed by the CIT(A). Reliance was placed upon ACIT, Delhi vs Prabha Sanghi para 10, 13 [2013] (1) TMI 18; Kamal Mishra vs ITO, Ward 31(2) [2008] 19 SOT 251 (Delhi); and DLF Office Developers v ACIT, Delhi [2008] 23 SOT 19 (DELHI) and Prem Sudha Exports Pvt. Ltd. vs ACIT 17 SOT 293 (Mum.).
The Ld. Sr. DR, Mr. Sonbhadra relied upon the impugned order. No contrary decision in support of the Revenue was cited. Nor any distinction on I.T.A .No.-1100/Del/2014 facts from the decisions cited by the Ld.AR in support of assessee’s case was attempted.
We have heard the rival submissions and perused the material available on record. It is seen that the ownership of the 2 properties by the assessee is not in dispute and it is an admitted fact that 15, Chinar Drive DLF Chatarpur, New Delhi which had been rented in the earlier years @ Rs.1 lac per month. In the year under consideration admittedly it has been lying vacant. The property situated at Kasoli is accepted as self-occupied property used for vacation purposes. The assessee it has been stated has been residing in her marital home alongwith her husband and mother-in-law. In these circumstances, the issue which devolves for consideration in terms of the grounds raised
by the assessee relying on section 23(1)(c) is can the value of the said property be taken at NIL since the property remained admittedly vacant as the assessee due to a recession in the market was unable to find a tenant. These facts are admitted facts on record since as per page 5 of the AO and page para 4 of the impugned order in 2007
08. AY, the said property was lying vacant for three months and in the year under consideration it remained vacant for the entire year and infact for three months in 2010
11. AY also the said property admittedly was lying vacant. The AO has considered this fact however the claim on the grounds of recession in the market and inability to find a tenant has been dismissed by the AO on the grounds that the provisions of section 23(1)(c) would become prone to misuse. We find that considering the judicial precedent cited where facts are not in dispute the Ld.CIT(A) erred in rejecting
I.T.A .No.-1100/Del/2014 the claim on the specious reasoning that the provisions could be misused.
Section 23(1)(c) was introduced by the Finance Act, 2001 w.e.f 01.04.2002. For ready-reference, the same is reproduced hereunder:-
“(1) For the purposes of section 22, the annual value of any property shall be deemed to be- (a) the sum for which the property might reasonably be expected to let from year to year; or (b) Where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable; or (c) Where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable.” (emphasis provided)
The fact that the said property has been let out by the assessee in the immediately preceding assessment year for 9 months is a fact. Thus the property has been “let out” in the earlier years is not disputed. The fact that due to a recession in the market it could not be let out is consistently claimed.
CBDT Circular No.14 of 2001-252 ITR Statute para 29 unambiguously explains that the said amendment was brought out to rationalize the provisions of the Act so as to simplify determination of ALV. Considering the facts which have not been disputed and the above provision of law, we find that in the light of the judicial precedent cited namely ACIT, Delhi vs Prabha Sanghi para 10, 13 [2013] (1) TMI 18; Kamal Mishra vs ITO, Ward 31(2) [2008] 19 SOT 251 (Delhi); and DLF Office Developers v ACIT, Delhi [2008] 23 SOT 19 (DELHI) and Prem Sudha Exports Pvt. Ltd. vs ACIT 17 SOT 293 (Mum.), and noting that no I.T.A .No.-1100/Del/2014 contrary view has been cited by the Revenue despite more than ample opportunity, we find that the appeal of the assessee has to be allowed.
In the result, the appeal of the assessee is allowed.
The order is pronounced in the open court on 21st September 2016.