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TMI Blog2008 (4) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... and in accordance with the provisions of law, the learned CIT(Appeals) has erred in holding that the building is not one property as held in 151 ITR 9 (Ker.) and consequently upholding the action of the learned Assessing Officer in not allowing deduction of Rs. 1,01,71,200 and Rs. 12,60,000 on account/out of vacancy allowance in respect of portions of the building and parking area respectively which were vacant during the year by placing reliance on the decision of the Kerala High Court reported in 151 ITR 9 in the case of CIT v. Joy P. Jacob (which, we understand, has not reached its finality yet). 3. (a) Whether, on the facts and in the circumstances of the case, the Assessing Officer and CIT(A) were right in holding that the vacant parts of the building had an annual value in accordance with section 23 of the Income-tax Act ? (b) Whether, on the facts and in the circumstances of the case, the Assessing Officer and CIT(A) were right in denying the appellant assessee vacancy allowance under section 24(1)(ix) of the Income-tax Act." 5. The issue involved in these grounds relates to the allowability of vacancy allowance in the case of the assessee. 6. Before taking up the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P.) Ltd. 31-3-2001 5th 4,158 Vacant For Whole Year 6th 8504 Svedala 40 Full period 8,163,840 8504 Industry Total 17008 India Pvt. Ltd. 9th 8,504 Vacant for Whole Year 10th 8,501 Free 40 1-8-2000 1,360,160 4,800,481 Market to 31-3-2001 Service 11th 8,491 Cargil 40 Full period 8,343,600 India Ltd. 12th 7,698 Total 24,690 8,343,600 6.4 Before the Assessing Officer, the submission of the assessee was that under sub-clause (ix) of sub-section (1) of section 24 of the Income-tax Act, deduction is permitted from house property and as per sub-clause (b) of this provision, the assessee is entitled to the remission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue has been computed as per law, deduction under section 24(1)(ix) has to be allowed. The learned CIT(Appeals) also did not find force in the submission of the assessee and confirmed the order of the Assessing Officer. 7. Before us, the learned counsel for the assessee Shri Pradeep Dinodia submitted that the building of the assessee was a commercial building, comprising of basement and upper floors, having common 'in' and 'exit' points. The building was provided with numerous common facilities and services, including common passage, elevators, lifts, stairs and ramps, centrally air-conditioning system, stand-by generators, fire escape systems, electricity and water etc. Thus, it is a compact building and each floor level is inter-connected and thus for the purpose of letting out, it was one building. According to him, during the year under assessment, the building was partly let out to various tenants and remained partly vacant. 7.1 The learned counsel for the assessee made reference to the provisions contained under section 23(1)(c) as amended with effect from 1-4-2003 and the old provision of section 24(1)(ix), which were applicable to the assessment year 2001-02. According t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 24(1)(ix) was subsequently amended and was replaced by section 23(1)(c), which is as under : "Sec. 23(1)(c).-Where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable." 9.5 The term 'property is let' appears in the amended provision also as it appears in the old provision contained under section 24(1)(ix). As the same terminology appears in the old provision as well as in the new provision, the interpretation placed on the term 'property is let' under the amended provision can be adopted for construing the said terminology appearing in the old unamended provision. 9.6 The issue relating to the construction of the term 'property is let' came before the Mumbai Bench of the ITAT in the case of Premsudha Exports (P.) Ltd. (supra). In that case the assessee-company held property for the purpose of letting out. However, the property could not be let out despite efforts and the property remained vacant throughout the year. As the object of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (3) of the same section 23. These words do not talk of actual let out also but talk about the intention to let out. If the property is held by the owner for letting out and efforts were made to let it out, that property is covered by this clause and this requirement has to be satisfied in each year that the property was being held to let out but remained vacant for whole or part of the year. The words 'property is let' are used in this clause to take out those properties from the ambit of the clause in which properties 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 one sees the combined reading of sub-sections (2) and (4) of section 23. One thing is more important because where the Legislatures have considered that actual letting out is required, they have used the words 'house is actually let'. This can be seen in sub-section (3) of same section 23. But in clause (c) above, 'actually let' words are not used and this also shows that meaning and interpretat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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