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2022 (7) TMI 74 - AT - Income TaxIncome from house property - notional rental income assessed in the hands of Appellant by the Assessing Officer in respect of area leased out by the Appellant to the Lessee - for Leased Property CIT(A) did not grant benefit of vacancy allowance for the period commencing from 19.10.2012 to 31.12.2012 - case of the Appellant that during the aforesaid period, despite making best efforts, the Leased Property could not be rented - HELD THAT:- In the case of Premsudha Exports (P) Ltd. [2007 (5) TMI 348 - ITAT MUMBAI] it has been held by the Tribunal that even the intention to let out the property would be sufficient to invoke provisions of Section 23(1)(c). The fact that Appellant intended to rent the Leased Property and made efforts for the same has not been doubted by the Assessing Officer or by the CIT(A). Accordingly we hold that the Appellant is entitled to benefit of vacancy allowance in terms of Section 23(1)(c) of the Act for the period commencing from 19.10.2012 to 31.12.2012 during which the Leased Property was actually vacant. Notional interest charged for the period commencing from 01.01.2013 to 31.03.2013 forming part of the rent free period of five months - Appellant documentary evidence in the forms of approvals obtained by the Lessee from the Electrical Department, Bangalore, Govt. of Karnataka and the civil & interior works contract entered by the Lessee for making the Leased Property fit for occupation. However, the same were simply brushed aside by the CIT(A) - it is admitted facts that no rent has actually been received by the Appellant for the period of three months commencing from 01.01.2013 to 31.03.2013. In absence of any allegations by the Revenue regarding the bonafides of the transactions, the agreement between the parties is to be accepted. In our view, the Assessing Officer erred in attributing a notional rent for a period of three months without appreciating the nature of transactions - no efforts were made by the Assessing Officer to determine the monthly rental/rate at which the Leased Property might have been reasonably expected to be let out in terms of Section 23(1)(a) - actual annual rent received by the Appellant cannot be substituted by a notional rent without the Assessing Officer arriving at a finding that the Leased Property is can be reasonably expected to be let out for a higher sum. In view of the aforesaid, we delete the addition of notional rent made by the Assessing Officer for the period of three months commencing from 01.01.2013 to 31.03.2013.
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