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2007 (5) TMI 348 - ITAT MUMBAIComputation of Income from house property - Determination of annual letting value (ALV) - scope of clause (c) of sub-section 23(1) - Deemed rental income - vacant property - Interpretation of the words ‘property is let’ - whether actual letting out is must for a property to fall within the purview of this clause (c) by satisfying the requirement of words ‘property is let’ present in this clause - CIT(A) restricted the ALV to 8.5 per cent of the investment cost - HELD THAT:- Section 23(1) was amended and substituted by new provision with effect from 1-4-2002 by Finance Act, 2001. The impugned assessment year is 2003-04 and therefore the amended section of 23 is applicable to the present case and the amended section 23(1) contains three clauses dealing with different situations to compute the annual value of any property. These three clauses are independent clauses and deals three type of situations. Having applied these three situations to the facts of the case, we are of the view that assessee’s case falls within third situation and annual value of the property is to be computed as per sub-clause (c) of the Act because the property remained vacant for the whole year. We feel that the words ‘property is let’ are used in this clause to take out those properties from the ambit of the clause in which property are held by the owner for self-occupation i.e., self-occupied property (i.e. SOP) because even income on account of SOP, excluding one such SOP of which annual value is to be adopted at nil, is also to be computed under this head as per clause (a) of section 23(1) if we see the combined reading of sub-sections (2) and (4) of section 23. We find from the memorandum of association that the assessee is entitled to purchase the property for its let out and to earn rental income. Copies of resolutions of Board of Directors are also placed before us in both the cases where from it is evident that one of the Director was authorized to take necessary steps to let out the property in question. They have also fixed the monthly rent and the security deposits of both the properties. Consequent to the resolutions, the assessee has approached to various Estate and Finance Consultants for letting out the properties and the request was also duly acknowledged by the Estate and Finance Consultants. The series of correspondence are placed before us to demonstrate the efforts made by the assessee for letting out of its properties, but, unfortunately during the year under appeal, assessee could not get the suitable tenant on account of hefty rent and security deposits. The correspondence exchanged between the assessee and the different property consultants are placed on record. From this correspondence, it is, noticed that the assessee has approached various property consultants to let out its properties and during the year, it could not get a suitable tenant. From a careful perusal of these documents, it has become evident that during the whole year, assessee made its continuous efforts to let out the properties and under these circumstances, this property can be called to be let out property in terms of our observations. Since the property has been held to be let out property, its annual letting value can only be worked out as per sub-clause (c) of section 23(1) of the I.T. Act and according to this clause, the rent received or receivable during the year is NIL and as such the same be taken as the annual value of the property in order to compute the income from house property. We, therefore, order accordingly. In the result, appeals of the assessee are allowed.
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