TMI Blog2011 (4) TMI 1383X X X X Extracts X X X X X X X X Extracts X X X X ..... y during the year was nil the same was to be taken as the annual value of the property in order to compute the income from house property Therefore, we are of the view that since the rent received or receivable from the property in question during the year was nil, the same was to be taken as the annual value of the property in order to compute the income from house property as provided in Section 23(1)(c). We, therefore, set aside the order of the ld.CIT(A) - I.T.A.No. 96(LKW.)/2011 - - - Dated:- 29-4-2011 - Shri H.L.Karwa, Hon'ble Vice President and Shri N.K.Saini, Accountant Member Appellant by : Shri M.L.Agrawal, Advocate Respondent by : Shri P.K.Bajaj, Sr.D.R. O R D E R PER N.K.SAINI, ACCOUNTANT MEMBER This is an appeal by the assessee against the order dated 8.12.2010 of the ld.CIT(A)-II, Lucknow. 2. The following grounds of appeal have been raised in this appeal : 1. That the learned Assessing Officer has erred both in law as well as in facts issuing notice u/s 148. 2. That there was no reason to believe that the income has escaped assessment. 3. That the proceedings u/s 148 were neither validly initiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2002-03. The AO pointed out that the assessee had not shown any income from the house property under Section 22 of the I.T.Act. During the assessment proceedings, the AO asked the assessee certain questions relating to the said property. The questions raised by the AO and the replies given by the assessee were as under : 1. Whether house property at 5th Floor, Kailash Kala Building let out? Reply: No. 2. Any documentary evidence regarding efforts made for let out property advertisement in newspaper etc. Reply: No. 3. How come property lying vacant for last 6 years. Reply: Not serviced by operational lift. 4. Any other properties in building let out or not. Reply: Yes, other properties in building let out for commercial purposes. 5.1 The AO did not find merit in the submission of the assessee that the property remained vacant for not working of the lift and that the lift was not repaired for five consecutive years. He estimated the fair market rent of the property at ₹ 20,000 per month and accordingly annual value of the property at ₹ 2,40,000 was added to the income of the assessee. 6. The assessee carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. from five financial years thus in terms of section 23(1) of I.T. Act, 1961 the ALV assumed by the assessee as NIL seems to be correct. The assessing officer has accepted this fact in AY 2005-06. As the facts regarding this property income are the same as were in assessment year 2005-06, the addition of ₹ 2,40,000/- made by the Assessing Officer as property income be deleted. 6.1 It was further submitted that since the property was lying vacant from financial year 2002-03 till assessment year 2005-06, no income was earned by the assessee. 7. The ld.CIT(A) pointed out that a remand report was sought from the AO in the assessment year 2005-06 wherein it was stated as under : the property situated on 5th floor in Kailash Kala Building at Shahnajaf Road, Lucknow and is not serviced by lift. The assessee has claimed that the property is vacant from F.Y. 2002-03 i.e. from five financial years thus in terms of section 23(1) of the I.T.Act, 1961 the ALV assumed by the assessee as NIL seems to be correct. 7.1 According to the ld.CIT(A) his predecessor vide order dated 23.10.2008 for the assessment year 2005-06, has deleted the addition on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing value was required to be worked out in assessee s case, therefore, the addition sustained by the ld.CIT(A) is justified. 11. After considering the submissions of both the parties and the material on record, it is noticed that the property in question remained vacant and claim of the assessee was that she made all the efforts to let out the property, but the same could not be let out because the property was situated at 5th floor and the lift was not working. On a similar issue, the I.T.A.T. Mumbai Bench C in the case of Premsudha Exports (P.) Ltd. vs. ACIT,C.C.10, Mumbai (supra), has held as under : It was the case of the revenue that clause (c) of section 23(1) can only be invoked in those cases where the property was let out in earlier years or in the present year. The assessee, on the other hand, contended that the intention of letting out the property was to be seen for invoking clause (c) of section 23(1) for computing the annual letting value of the property and it was irrelevant whether the property is/was let out. [Para I1] Therefore, the sole dispute, in the instant case, was regarding the interpretation of the words 'property is let' in cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious owner, it could be claimed that the property is let out property because the clause talks about the property and not about the present owner and since the property was let out in past, it is a let out property, although the present owner never intended to let out the same. Therefore, it is not at all relevant as to whether the property was let out in past or not. 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 are made to let it out, that property is covered by clause (c) 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. Above discussion shows that meaning and interpretation of the words 'property is let' cannot be 'property actually let out'. Thus, if a property is held with an intention to let out in the relevant year coupled with efforts made for letting it out, it could be said that such a property is a let out property and the same would fall within the purview of clause (c) of section 23(1). [Para 16] In the instant case, the assessee-company was e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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