Satya Sayee Babu Divi Vs ACIT (ITAT Hyderabad)
Notional Rental Additions on Multiple Properties Partly Deleted – Covid Vacancy & Lack of Ownership Considered – House Property Income Reworked – ITAT Hyderabad
The assessee challenged multiple additions made under the head “Income from House Property” based on notional/fair rental value of several residential properties. As reflected from the table on page 3, the AO had added notional rent for properties such as Lodha Kukatpally, Maharaja Towers penthouse, Bhavya Sri Arcade and others, increasing total income to ₹2.62 crore.
ITAT granted substantial relief holding that properties kept vacant during the COVID period or held for sale could not be taxed on notional rent merely due to ownership till sale date. Additions relating to Yarlagadda Residency and Lanco Hills were deleted since both properties were actually sold during the year and remained vacant due to pandemic conditions. Similarly, addition for Lodha Kukatpally was deleted as the assessee had neither possession nor ownership, which is a sine qua non for taxation u/s 22. Notional rent on Maharaja Towers penthouse was also deleted considering extraordinary pandemic circumstances and absence of actual rent.
However, the Tribunal upheld addition relating to Bhavya Sri Arcade property, noting that the assessee failed to substantiate revised claim of self-occupation or business use, and prior declarations showed a different property as self-occupied. Further, addition on Madhurawada plot was deleted as the AO’s fair rental value was based only on vague local enquiry without comparable evidence, especially when actual rent of ₹1.44 lakh had already been offered. Overall, the appeal was partly allowed, with most notional rent additions deleted except those unsupported by evidence
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
