Case Law Details
ACIT Vs Sh. A. S. Motiwala (ITAT Mumbai)
Conclusion: Where the property or any part of the property is let and was vacant during the whole or part of the previous year and owing to such vacancy, the actual rent received or receivable is less than ALV, the sum so received or receivable during the year is less than the sum received or receivable during year shall be annual value, then no deemed rent could be assessed.
Held: AO made additions made on account of ‘deemed rent’ on the reason that the said premises were vacant during whole of the year and not let out at all during the year, hence the provisions Section 23(1)(c) would not apply and therefore assessee was not eligible for any deduction on account of vacancy and annual value of all the vacant property should be taken in terms of section 23(1)(a). It was held assessee had stated that he had all the intention to let out these premises but for want of suitable tenants, despite best efforts put in by the Estate Agents, whose services had been engaged, he could not find suitable tenants during the previous year under consideration and the said premises remained vacant for the whole of the year. Since the said properties remained vacant for whole of the relevant financial year, therefore, taking into consideration the CBDT Circular No. 14/2001, wherein it was stated that “where the property or any part of the property is let and was vacant during the whole or part of the previous year and owing to such vacancy, the actual rent received or receivable is less than ALV, the sum so received or receivable during the year is less than the sum received or receivable during year shall be annual value, then no deemed rent could be assessed. It was also noted that AO had not even considered the admissible deduction towards Municipal taxes and society maintenance charges.Thus, the addition made on account of deemed rent was deleted.
Income Tax Act, 1961, Section 23
Income from house property— Gross annual value– Property lying vacant, despite best efforts
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