Case Law Details
Construction expenses not recorded in books of account, cannot be a ground for assessing the rental income under the head “income from other sources”when the conditions of Section 22 of the Act for assessing the annual value of the property have been fulfilled by the assessee. By not recording construction expenses in books of account, the rights of ownership of the assessee over the property cannot be taken away and it remains the owner of the property.
1. The facts in brief of the case are that during year under consideration, the assessee received rent of Rs.1,22,98,440/-. In the return of income filed for the year under consideration on 29.09.2009, the assessee declared the said rental income under the head tax payment. Before the learned Commissioner of Income Tax (Appeals), the assessee produced copy of sale deed through which the assessee purchased the property. After consideration of the submissions of the assessee, the learned Commissioner of Income Tax (Appeals) observed in the impugned order as under:
(i) According to the sale deed the assessee only purchased roof rights over the entire second floor with the right to construct and own any areas/floors on the third floor and subsequent terraces in respect of Plot No. 26, Block No. 34, Pusa Road, New Delhi, along with 20% indivisible leasehold rights in the plot of land.
(ii) The sale deed clearly reflected that the third floor was not constructed as on the date of purchase of the property.
(iii) In the balance sheet as on 01.04.2008, only the investment in purchase of terrace right with the right to construct was reflected and there was no investment on construction of the property either in the relevant year or in the previous year reflected in the balance sheet.
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