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2018 (4) TMI 1710 - AT - Income TaxGenuineness of expenditure - Disallowance of employees expenses and other expenses on account of alleged unverifiability - not filing the proper vouchers in support of the claim - HELD THAT:- AO issued show cause notice to the assessee to produce the books of accounts along with vouchers for verification of genuineness of the expenditure claimed. The assessee failed to produce the requisite supporting evidence. Even before the ld. CIT (A), the assessee did not produce the vouchers in support of the claim of expenditure. It is not the case of the AO that the expenditure is excessive. Keeping in view the nature of business activity of the assessee and further the nature of expenditure as claimed by the assessee is also not disputed to be incurred wholly and exclusively for the purpose of business of the assessee, therefore, in the facts and circumstances of the case, we are of the considered view that the disallowance on account of not filing the proper vouchers in support of the claim shall be restricted to 10% instead of 20%. We direct the AO accordingly to restrict the disallowance to 10% of the expenditure. - Decided partly in favour of assessee. Taxability of notional rental income in respect of unsold space held as stock-in-trade -Notional income assessed by the AO u/s 23(1)(a) in respect of unsold stock-in-trade - AO proposed to determine the ALV of the unsold space which is not let out by taking into consideration the rent in respect of the portion let out at ground floor of the complex - HELD THAT:- It is mandate that the AO has to determine the annual letting value by considering the reasonable rent expected to be fetched by the property on the basis of the method provided for fixation of standard rent or computation of rateable value. Since in the case in hand the 4th floor of the property is not eligible for fixation of standard rent being unauthorized construction and subjected to demolition action of the Municipal authorities, therefore, in the normal circumstances the reasonable rent expected to be fetched by such property would be nil. Since the property in question is newly constructed and held as stock-in-trade, therefore the vacancy of the property being not let out is not intentional or deliberate act on the part of the assessee but it is beyond the control of the assessee to find a tenant for such unauthorized construction. Once the non-letting of the property is not due to the reason of intentionally keeping vacant by the assessee but it is because of the fact and circumstances that the said space could not be let out despite the best efforts of the assessee, the benefit of vacancy under section 23(1)(c) would be available to the assessee. As per the provisions of section 23(1)(c) the property can be vacant during the whole of relevant previous year and, therefore, both situation cannot co-exist that the property is actually let out and also the same is vacant during the whole year. Accordingly, in the facts and circumstances of the case when it was not possible for the assessee to let out the property, then the benefit of section 23(1)(c) would be available to the assessee. Hence the initial delay in letting out the property first time cannot be considered as deemed let out as per the provisions of section 23 of the Act. Accordingly we are of the considered view that the ALV of the property in question would be Nil as it was not possible to let out the property during the year under consideration and further the unauthorized construction of the property is otherwise not eligible for determination of standard rent or rateable value and consequently there is no basis for determination of ALV of the property under section 23(1)(a) of the Act. Hence we delete the addition made by the AO. - Decided in favour of the assessee
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