TMI Blog2012 (6) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... ven u/s 23(1)(c). Vacancy allowance can be given only when the property is let and vacant for part of the year. See Vivek Jain vs ACIT [2011 (1) TMI 897(HC)] - Decided against the assessee. Portion used for business purpose - Held that:- Portion of the property used by the partnership firm in which assessee is a partner has to be excluded from the total income. However, portion used by the company in which the assessee was share holder and director, cannot be considered for exclusion as company has separate and distinct identity and business being carried on by the company can not be considered as business done by share holder or director - Decided partly in favor of assessee. Fair rental value has to be determined on the basis of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 086 sq.ft. built up ( iv ) Third Floor 1086 sq.ft. built up ( v ) Fourth Floor 1086 sq.ft. built up Total Area 4967 sq.ft. built up 2.2 The assessee also submitted that the mezzanine floor, first floor and second floor remained vacant throughout the year and, therefore annual value should be taken as nil. As regards the third and fourth floor, it was submitted that these were occupied by partnership firm and companies for carrying out business and, therefore, no income could be assessed in respect of these floors as house property income. The assessee also submitted that even if no notional income from the property could be assessed, the same should be equal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the Tribunal. 4. Before us the ld. AR for the assessee submitted that the disputes were in relation to determining the ALV, allowability of vacancy allowance in respect of the area vacant throughout the year under section 23(1)(c), and exclusion of area used for the purpose of business from the purview of the ALV. It was argued that the area used by the firm in which the assessee was partner and company in which the assessee was director had to be considered as used for the purpose of business and therefore, it had to be excluded. Reliance was placed on the judgment of Hon'ble High Court of Gujarat in the case of CIT v. Rasiklal Balabhai (119 ITR 303) and the judgment of Hon'ble High Court of Allahabad in the case of CIT v. Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessed in respect of portion which was vacant throughout the year and whether portion occupied by the company and the partnership firm could be excluded from the purview of computation of income while computing income from house property. The other related issue is method of determination of annual value. The ld. AR has argued that the portion which remained vacant throughout the year has to be excluded from the purview of computation of income of house property under the provisions of section 23(1)(c). However, the claim of the assessee is contrary to judgment of Hon'ble High Court of Andhra Pradesh in the case Vivek Jain v. ACIT (337 ITR 74), in which it has been held that in case the property is not let out at all during the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the total income. As regard the portion used by the company in which the assessee was share holder and director, the same in our view cannot be considered for exclusion as company has separate and distinct identity and business being carried on by the company can not be considered as business done by share holder or director. Therefore, the portion occupied by the company for its business has to be considered while computing house property. 5.2 The only other issue left is determination of annual value of the property. Under the provisions of section 22, annual value of a property is deemed to be the sum for which property might reasonably be expected to let from year to year and in case rent actually received is greater the said valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous factors could be taken into account. Therefore, in our view, the fair rental value has to be determined on the basis of comparative cases in the locality and other relevant factors. The return on investment may not always be a reliable indicator of fair rent of the property which depends upon market conditions such as demand and supply position in an area. A comparative case in the locality will be the best guide for determination of fair rent. The issue regarding determination of fair ALV, therefore, in our view requires fresh consideration. We, therefore restore this issue to the file of AO. The AO will pass a fresh order after necessary examination in the light of observations made above and after allowing opportunity of hearing to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
