TMI Blog2012 (5) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... d in law, the learned Commissioner of Income-tax (Appeals)-II, Pune, erred in confirming the additions and observations made by the assessing officer in the assessment order in respect of following points. He erred: 1. In respect of income under the head 'income from house property'. a) In confirming the addition of Rs. 7,74,287 (gross amount Rs. 11,06,124, less 30% deduction towards repairs Rs. 3,31,837) under the head 'income from house property'. b) In confirming the addition of notional income which is neither received nor accrued to the Company c) In not appreciating that as per the correspondence the rent was not actually received and the properties were not actually used by the tenant for the period from 1.7.2005 to 31.12.2005 for which the AO has computed the notional income d) In not appreciating that the provisions of section 23(1)(c) are applicable in the facts and circumstances of the case and not that of section 23(1)(a) 2. In respect of confirmation letters submitted during the course of appellate proceedings: a) In treating the confirmation letters as additional evidence and hence rejecting the same where in fact these letters just confirmed the facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sister concern at a monthly rent of Rs. 6000/- and Rs. 8000/- per month respectively whereas earlier, these 2 flats were given at the rate of Rs.34,626/- and Rs. 23,111/- per month. The assessee explained before the A.O that they could not find suitable tenants, and, therefore, instead of keeping the flat vacant, they had given it on low rent at lower rate to another sister concern of PCS Ltd. It was also contended by the assessee that it was covered u/s. 23(1)(c) and not u/s. 23(1)(a). The A.O. rejected this explanation. The A.O stated that there was no reason for this drastic decrease in the rent for the period w.e.f. 1.1.2006. It was stated that it was merely to help the sister concern PCS (formerly PCS Industries Ltd.). A.O. calculated the rent receivable for the entire year at the same rate as the property was hired to PCS for the period April 2005 till December 2005. For this purpose, provisions of section 23(1)(a) were relied upon. It resulted in the gross addition to income from house property by an amount of Rs. 11,06,124/-. The A.O, also did not agree with the contention of the assessee that case was covered u/s. 23(1)(c) and not u/s. 23(1)(a) of the Act. The same has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unded on 3rd February 2006. 6. The Ld. A.R. pointed out that the above 4 flats were given on rent to PCS Technology Ltd. (formerly PCS Industries Ltd.) w.e.f. 1.1.2006. The assessee was trying to find tenants for all the 17 flats. However, it was unable to find suitable tenants for these flats. The rent with Patni Computer System Ltd. (PCS) was fixed in 2000 with 15% increment every year. It was not possible to get the last drawn rent for the flats. Hence, 4 out of the 17 flats were given on rent to PC Industries Ltd at a mutually agreed rent. They had taken only 4 out of the 17 flats and the assessee was unable to find tenants for the remaining 13 flats. The authorities below failed to appreciate that had the assessee not given these 4 flats on rent, it would have been entitled to vacancy allowance and there would be no income in respect of these 4 flats from 1.1.2006 to 31.3.2006. Thus, the intention was not to help the sister concern PCS Technology Ltd. by charging lower rent but to earn whatever income possible from these properties and to safeguard the interest in the property. He submitted that the authorities below failed to appreciate that vacancy allowance is automatical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses." Whereas in para No. 2, it mentions as "the term of the said agreement is upto December 31, 2005. As we no longer require the said premises referred under the said agreement, we, shall hand over vacant and peaceful possession of the above flat on expiry of the term on January 1, 2006 to your authorized representative." On the basis of above contents of the letter, the authorities below did not agree with the contention of the assessee that the above stated 4 flats were vacant from July 2005 till December 2005. 9. The contention of the Ld. A.R. before us in this regard remained that the formal handing over of the possession was kept in abeyance till the refund of the deposit since this was done for all the 17 flats collectively. It was pointed out that the deposits were refunded on 3.2.2006. The Ld. A.R. also tried to define the word "vacant" as per the law Lexicon as un-filled, empty, unoccupied. He also tried to define the word "unoccupied" as per order 20, rule 8 of Civil Procedure Code and Article 89(2) of the Constitution of India. He submitted that word "vacant" used in the Act means that the tenants should have ceased to occupy the accommodation with the intention of n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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