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2022 (6) TMI 894 - AT - Income TaxAddition under the head “house property” - lease rentals are to be paid from the date of handing over the building to lessee - AO held that the rental income of the property commenced on 01.02.2016 itself and has brought the corresponding amount of lease rental receivables from M/s.IBIBO Group Private Limited for the period 01.02.2016 to 31.03.2016 - HELD THAT:- The property was let out on 01.02.2016 the rent commenced from 01.06.2016. It is clearly mentioned in the lease deed that the rent commencement date shall be the date of handing over the physical possession of the fully fitted out and operational possession of the property. Section 23 was substituted with effect from 01.04.2002 by Finance Act, 2001 for and from assessment year 2002- 2003. In the case of S.M.Chandrashekar [2017 (1) TMI 52 - ITAT BANGALORE] Tribunal, had held that meaning and interpretation of the words 'property is let’ cannot be 'property actually let out’. As further held by the Tribunal that if a property is held with an intention to let out in the relevant year coupled with efforts made for letting it out, it could be said that such a property is a let out property and the same would fall within the purview of clause (c) of section 23(1). Physical possession was handed over only on 01.06.2016, since works for the period between 01.02.2016 and 01.06.2016 was being undertaken to make the demised property as operational - when the lease was executed on 01.02.2016, the lessee has paid the security deposit equivalent to 10 (Ten) months rent towards an interest free security deposit in respect of leased premise - Therefore, the lease commenced as on date of executing the lease deed and hence, the `property was let’ as per the provisions of section 23(1)(c) within the relevant financial year. Only an intention to let out a property and coupled with efforts to let out the property is sufficient to come within section 23(1)(c) of the I.T.Act. The case of the assessee in this appeal stands on better footing, inasmuch as, the property was actually been let out during the relevant financial year. Hence, applicable section is 23(1)(c) of the I.T.Act instead of section 23(1)(a) of the I.T.Act invoked by the CIT(A). Since the lease rental received for the relevant assessment year being `Nil’, the same has to be adopted instead of ALV as ordered by the CIT(A). Further, the lease rental received by the assessee from 01.06.2016 was disclosed under the head “income from house property” for the subsequent assessment year, namely, A.Y. 2017-2018 onwards. Addition under the head “other sources” - HELD THAT:- The assessee has not brought on record any documentary evidence to show that it had incurred interest expenditure as against the income assessed under the head `income from other sources’. Therefore, the addition sustained by the CIT(A) to the extent is confirmed.
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