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2009 (8) TMI 837

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..... d capital gain Rs. 6,19,682, vide order dated 27-12-2006 passed under section 143(3) of the Income-tax Act, 1961 ( the Act ). On appeal the ld. CIT(A) confirmed the additions made by the Assessing Officer and dismissed the appeal. 3. Being aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us. 4. Ground No. 1(a ) is against the sustenance of addition of income from house property Rs. 5,15,274. 5. The brief facts of the above ground are that it was observed by the Assessing Officer that the assessee is having a 50 per cent share on two flats viz., flat Nos. 18B and 19B in Belvedere Court. Both the flats are jointly owned by the assessee and his wife Smt. Kusum Suresh Sadarangani. The assessee has claimed both the flats as one flat and has shown annual value at Rs. nil. Since the assessee has not declared any income from second flat as per provisions of section 23(4)(b) of the Act, the assessee was asked to show cause as to why the annual value of the property shall not be brought to tax as income from house property and the annual value was proposed to be taken at Rs. 7.50 lakhs being 50 per cent of the rent received by the assessee in financial year 2004-05. .....

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..... d 19B are also assessed as one flat as per society maintenance bill appearing at page 98 of assessee s paper book. He further submits that the said duplex flat, during the year under consideration, was used for self-occupation by the assessee, therefore, no income from house property was shown in the return of income and, therefore, the value of the property under section 23(2) should be taken as nil. He further submits that since the property was not let out during the year under consideration, therefore, the Assessing Officer was not justified in taking the rental value of the whole property at Rs. 30 lakhs per annum which, in fact, was let out in financial year 2004-05 relevant to assessment year 2005-06. The reliance was also placed on the following decisions :- (1)K.G. Vyas v. Seventh ITO [1986] 16 ITD 195 (Bom.) (2)CIT v. Bijoy Kumar Almal [1995] 215 ITR 22 (SC) (3)D.R. Sunder Raj v. CIT [1980] 123 ITR 471 (AP). 8. On the other hand the ld. DR while relying on the order of the Assessing Officer and the CIT(A) further submits that since there are two separate agreements of flat Nos. 18-B and 19-B they are to be considered as two separate units and therefore, the Assessing Offi .....

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..... y the owner. (4) Where the property referred to in sub-section(2) consists of more than one house- (a)The provisions of that sub-section shall apply only in respect of one of such houses, which the assessee may, at his option, specify in this behalf; (b)The annual value of the house or houses, other than the house in respect of which the assessee has exercised an option under clause (a), shall be determined under sub-section (1) as if such house or houses had been let. 11. A perusal of the above provisions show that the word property has been used by the Legislature in a wider sense so as to include more than one house. However, the right to compute the ALV at nil in respect of self occupied property is restricted to one house even though the property owned by the assessee may consist of more than one house. Section 23(2)(a) permits the assessee to compute the ALV of self occupied property at nil provided : ( i) the property must be in the occupation of the owner, ( ii) the occupation of the owner must be for the purpose of his own residence, (iii) it is not let during any part of the accounting year and (iv) no other benefit therefrom is derived by the owner. However, section 23(4 .....

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..... in between the two apartments. The fact that at the time when the Inspector inspected the premises, the flats were occupied by two different tenants was not a ground to hold that the apartment was not one residential unit. The fact that the assessee could have purchased both the flats in one single sale deed or could have narrated the purchase of two premises as one unit in the sale deed was not a ground to hold that the assessee had no intention to purchase two flats as one unit. The assessee was entitled to the exemption under section 54. 14. In Farouk D. Vevaina s case (supra) relied on by the ld. DR, the assessee was allotted 2nd and 3rd floor in the building Jackers apart from 1/6th share in the flat at 6th floor. The assessee had computed the ALV at nil on the ground that all the flats allotted in the new building was in lieu of his 1/6th share in the old property and, therefore, all the flats allotted to him constitute one property which was used for self residence. However, the Assessing Officer considering the provisions of section 23(2)(b) of the Act was of the view that the assessee was entitled to compute the ALV at nil in respect of one residential house only. It has .....

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..... ty of Rs. 10,30,548. He ought to have considered the facts and circumstances made during the course of assessment. 20. However, the ld. CIT(A) in para-2 of his order has mentioned the aforesaid ground as under :- The first ground of appeal is against the addition of Rs. 5,15,274 under the head Income from house property . 21. The ld. CIT(A) has decided the ground to the extent of addition of Rs. 5,15,274 only and there is no adjudication in respect of the remaining addition of Rs. 5,15,274 which is in respect of property flat No. 21, Belvedere Court. Since the order of the ld. CIT(A) is silent on the ground raised by the assessee, therefore, in the interest of justice, the issue is restored back to the file of the ld. CIT(A) to decide the aforesaid ground afresh and according to law after providing reasonable opportunity of being heard to the assessee and, accordingly, the ground taken by the assessee is partly allowed for statistical purposes. 22. Ground No. 2 is in respect of sustenance of addition of Rs. 6,19,682 in respect of capital gain on sale of flat. 23. After hearing the rival parties and perusing the material available on record we find that the ld. CIT(A) has decided th .....

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