SHRI SANJAY GUPTA,,AHMEDABAD vs. THE DCIT, CENTRAL CIRCLE 2(2), AHMEDABAD

The appeal filed by the Assessee is against the order passed by the Ld. Commissioner of Income Tax (Appeals)-12, (in short “Ld. CIT(A)”), Ahmedabad vide order dated 19.11.2019 passed for Assessment Year 2012-13.

The Assessee has taken the following grounds of appeal:

The brief facts of the case are that the assessee is an individual having salary income, income from house property and capital gains during the year under consideration. During the course of assessment, the assessee furnished the following details of property owned by the assessee during the year under consideration:

On being requisitioned, the assessee submitted that property situated at Sr. Nos. 1 & 2 were not let out for almost whole year and the Casela Tower property was vacant for the whole year. Therefore, there is no question of considering the annual letting value of the aforesaid property for the impugned year under consideration. However, the Assessing Officer computed the Annual Lettable Value (“ALV”) of the property of the aforesaid properties by considering the ALV shown by the assessee in the earlier year with an increase of 10%. Accordingly, the Assessing Officer computed the ALV of the aforesaid two properties as below:

In appeal, the assessee submitted that the Assessing Officer erred in facts and law in presuming that the ALV of the aforesaid properties was taxable, even though they were lying vacant for the whole year and no deduction on account of vacancy allowance under Section 23(1)(c) of the Act was allowed by the Assessing Officer. The assessee relied upon several judicial precedents in support of the contention that the Assessing Officer ought to have allowed vacancy allowance under Section 23(1)(c) of the Act. Further, the Counsel for the assessee submitted that in respect of the property at Casela Tower (Ahmedabad), the same was given to M/s. Neesa Leisure Ltd. to be used as guest house or service apartment for their staff and company guest. In this regard, the assessee submitted electricity bill for month of December 2018, showing the category of property as “commercial” and submitted that the property has been in commercial use, for business purposes and therefore, the income from the said property could not be charged under the head “income from house property”. In appeal, Ld. CIT(A) dismissed the appeal of the assessee with the following observations:-

The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A) confirming the addition in the hands of the assessee.

Before us, the Counsel for the assessee submitted that Ld. CIT(A) has erred in stating that the assessee has never claimed that the property at Drive- in-Park, Ahmedabad was lying vacant for the whole of the previous year. The Counsel for the assessee submitted that evidently, Ld. CIT(A) has passed order on an incorrect presumption of facts that the above property was not let out for the impugned year under consideration. The Counsel for the assessee submitted that the aforesaid property was lying vacant for almost the entire year under consideration and hence the assessee was eligible for deduction on account of vacancy allowance under Section 23(1)(c) of the Act, which was wrongfully denied to the assessee. Further, in respect of income from property at Casela Tower, Ahmedabad, Ld. CIT(A) has again incorrectly dismissed the appeal of the assessee by holding that the property was not used for commercial purposes, again on an incorrect presumption of facts. In the light of the above, the Counsel for the assessee requested that in the interest of justice, the matter may be restored to the file of Ld. CIT(A) for de-novo consideration so as to allow the assessee to furnish all documentary evidences in support of his contention that the above property was eligible for vacancy allowance / was used for commercial purposes and the assessee’s appeal has been incorrectly dismissed by Ld. CIT(A) on an incorrect presumption of facts.

In response, the Ld. D.R. placed reliance on the observations made by the Ld. CIT(A) order.

We have heard the rival contentions and perused the material available on record.

Looking into the instant facts, in the interest of justice, the matter is being restored in the file of Ld. CIT(A) for de-novo consideration and the assessee would at liberty to furnish all necessary documents / supporting evidences to bring the complete facts on record to demonstrate that the assessee is eligible for vacancy allowance in respect of property at Drive-in- Park and that the property at Casela Tower is liable to be taxed as business income in the hands of the assessee.

In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 23/09/2024