A.S. Raja Sons Enterprises (P.) Ltd Vs ACIT (ITAT Visakhapatnam)
ITAT Vishakhapatnam held that invocation of deemed rent under section 23(1)(a) of the Income Tax Act unjustified since property of the assessee is leased out for a continuous long period for the occupation of tenants.
Facts- The assessee is engaged in the business of letting out buildings both residential and non-residential. The case of the assessee was selected for scrutiny and accordingly statutory notices u/s. 143(2) and 142(1) of the Act. AO observed that assessee has entered into a lease agreement with three parties to rent out different portions.
AO noticed difference in rental income being received from three parties and thereafter issued letter dated 05.04.2021 to the assessee to explain why the deemed rent receivable by the property u/s. 23(1)(a) could not be estimated for the purpose of computation of income from House property of the assessee.
AO not being satisfied with the submissions made by the assessee made an addition of Rs. 6,04,80,000/- being the difference in the rental income u/s. 23(1) of the Act. Further, AO also disallowed a sum of Rs.12,50,000/- u/s. 24(b) of the Act.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
