I-T - Whether ALV of house property can be considered as income from house property, if it is established that such property was not actually let out in relevant FY due to recession - NO: ITAT
By TIOL News Service
NEW DELHI, NOV 23, 2016: THE ISSUE IS - Whether the annual letting value of a house property can be considered its income from house property, in presence of the admitted fact that due to recession in the market, such property could not be actually let out in the relevant financial year. NO IS THE VERDICT.
Facts of the case:
The assessee since her marriage in 1979 including the year under consideration has been living with her family members in 17, Birbal Road, New Delhi which was the official address for income tax purposes owned jointly by her husband and mother-in-law. It was his submission that AO invoked the provisions of section 23(1)(a) r.w.s 23(4)(b) and adopted the ALV of residential property as Rs.13,20,000/- as against Rs.1 lac per month on which it was let out in the preceding AY and increasing the same at 10% taking per month rent at Rs.1,10,000/-. It was submitted that the fact on record was that the said property in the year under consideration was lying vacant and that CIT(A) rejected the main plea of assessee that ALV on the basis of section 23(1)(c) should be at NIL upheld the applicability of section 23(1)(a) r.w.s. 23(4b) and granted part relief by reducing the ALV of residential house lying vacant to Rs.12 lacs as deemed income under the head income of "house property" and upholding the addition to the extent of Rs.8 lacs deleting the balance addition of Rs.40,000/-.
On appeal, the ITAT held:
++ the AO has considered this fact however the claim on the grounds of recession in the market and inability to find a tenant has been dismissed by the AO on the grounds that the provisions of section 23(1)(c) would become prone to misuse. We find that considering the judicial precedent cited where facts are not in dispute. CIT(A) erred in rejecting the claim on the specious reasoning that the provisions could be misused. The fact that the said property has been let out by the assessee in the immediately preceding assessment year for 9 months is a fact. Thus the property has been "let out" in the earlier years is not disputed. The fact that due to a recession in the market it could not be let out is consistently claimed.
++ CBDT Circular No.14 of 2001-252 ITR Statute para 29 unambiguously explains that the said amendment was brought out to rationalize the provisions of the Act so as to simplify determination of ALV. Considering the facts which have not been disputed and the above provision of law, we find that in the light of the judicial precedent cited namely ACIT, Delhi vs Prabha Sanghi; Kamal Mishra vs ITO; and DLF Office Developers v ACIT, Delhi, and noting that no contrary view has been cited by the Revenue despite more than ample opportunity, we find that the appeal of the assessee has to be allowed.
(See 2016-TIOL-2017-ITAT-DEL)
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