TMI Blog1992 (6) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... final notional income from self-occupied portion at Rs. 4,860 was included in the total income of the appellant. It is essential to mention that this computation of property income from the self-occupied residential house was submitted by the appellant which was also accepted by the Revenue. The appellant, for the purpose of section 23(2) of the Income-tax Act, has taken 1/10th of the property income only. The ITO, however, discovered that there was a mistake of law inasmuch as, as per the provisions of section 23(2), the amount required to be included as income from self-occupied property should have been 1/10th of the other income excluding income from property and, therefore, he issued a notice under section 154 and invited objections of the assessee. The assessee supported its computation and requested the ITO to drop the rectification proceedings. The ITO was, however, of the view that there was a mistake apparent from record and, therefore, he rectified the assessment. The appellant also did not succeed before the Commissioner of Income-tax (Appeals). 3. Before us, the learned counsel for the appellant Sri K. Ranganathachari, argued that the appellant had been following a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jumla ka Devdi property is used for the purposes of his own residence. The total area of the property is 9,652 sq. ft. out of which 6,854 sq. ft. is self-occupied and 2,798 sq. ft. is let out for which the rent has been received. In the opinion of the learned counsel, the proviso to section 23(2) does not apply to cases where part of the house has been let out and only part has been used for self-occupation. The learned counsel points out that if the whole house was occupied by an assessee, then the proviso to section 23(2) was applicable. Since that is not the case and the property has been occupied partly by the appellant, the proviso to section 23(2) has no application and consequently no addition of any amount should be made under the provisions of section 23(2). He, therefore, contends that the addition made by the Revenue is not justified. 5. The learned counsel has also brought to our notice the amendment to section 23(2) with effect from 1-4-1987. The said amendment to section 23(2) speaks of a house and part of a house. The amendment should be taken as clarificatory and, therefore, it should be assumed that prior to 1-4-1987, the same position was obtainable. In the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a highly debatable issue. It is a mistake of law which is very apparent from the record and has, therefore, rightly been rectified by the ITO. The learned departmental representative, therefore, prays that the orders of the Revenue should be maintained. 10. We have heard the rival submissions. The provisions of section 23(2) have undergone change from time to time. Up to assessment year 1986-87, determination of the annual value of owner occupied dwelling house involved three steps. Firstly, the annual value is determined in the manner as if the property were let out to tenants. The amendment to section 23(2) by Taxation Laws (Amendment) Act, 1970, effective for and from assessment year 1971-72, assures that full municipal taxes payable are to be deducted in such computation. Secondly, the amount of annual value so determined is reduced by one-half of such value or Rs. 3,600 (up to assessment year 1982-83 Rs. 1,800), whichever is less. Thirdly, if such balance exceeds 10% of total income other than the income from such self-occupied property but without deductions allowable under Chapter VIA, the excess is to be disregarded. However, as a result of substitution with effect fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, not available where the house property has been let out on rent. This is so because the object of section 23(2) is to provide relief to the owner when he, in his capacity as owner, occupied the property for his own residence. In other words, section 23(2) provides for the mode of computation of income from property which is in the occupation of the owner for the purpose of his residence and under the proviso to section 23(2) operative up to 31-3-1987, the maximum value of income from house property which is occupied by the owner himself is limited to 10% of his total income. The total income for this purpose is to be computed without including therein any income from such self-occupied property and before making any deductions under Chapter VIA of the Income-tax Act. 12. It is, therefore, clear from the provisions of section 23(2) that the maximum value of the income from house property which is under the occupation of the owner himself is limited to 10% of the other income. The property income has been specifically excluded by the section and it has also been laid down that 10% income should be computed before making any deduction under Chapter VIA of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be given the common parlance meaning. The dictionary meaning of the word is "building for dwelling in, a building in general, a dwelling place". It has also the meaning of abode, habitation etc. Examined in the light of the observations of the Orissa High Court in the above decision, we are, therefore, of the view that prior to 31-3-1987, the word "house" used in section 23(2) meant a dwelling place, which may even be a part of the house and need not necessarily be the full house, under the occupation of the owner. We are, therefore, of the view that the arguments directed by the learned counsel have no legal basis and have to be rejected. 14. As already mentioned, it is a settled law that for the purpose of computing the value of property under section 23(2) in respect of a house occupied by the owner for his own residence, 10% of the other income, excluding the property income and before making any deduction under Chapter VIA, has to be included in the total income of an assessee. In our view, there is no debatable issue with regard to this legal position. Since the ITO had failed to apply the law, his action was a mistake of law which is apparent and glaring from the face ..... X X X X Extracts X X X X X X X X Extracts X X X X
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