TMI Blog2015 (6) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the I.T.Act, so far as it pertains to the interest expenditure. - ITA No. 5258/Mum/2013 AND ITA No. 5318/Mum/2013 - - - Dated:- 10-6-2015 - SHRI R.C.SHARMA, AM MS. SUSHMA CHOWLA, JM Assessee by : Shri S.Venkatraman Revenue by : Shri M.Rajan O R D E R PER R.C. SHARMA (A.M): ITA No.5258/Mum/2013 (By Department): This is an appeal filed by the revenue against the order of CIT(A)-for the assessment year 2007-08, wherein the revenue is aggrieved by the action of CIT(A) in allowing carry forward losses u/s.71B of the Act without appreciating the fact that the ld. CIT(A) himself has confirmed the expenses as Pre-operative expenses and such expenses can be claimed u/s.35D of the I.T.Act. 2. Facts in b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee is entitled to value property at NIL during the year u/s.23(1)(c). The precise observation of the Tribunal was as under :- 4. We have heard the ld. Counsel and the ld. DR and perused the paper book placed on record along with the copies of relevant case law relied on by parties. The action of Assessing Officer in determining the ALV at 10% of the cost of property cannot be approved as there are catena of decisions that the ALV has to be determined based on the Annual Ratable Value determined by Municipal authorities. The principle was held by Hon'ble Bombay High Court in the case of M.V. Sonavalae vs. CIT (177 ITR 246) long back, which was being followed in number of later decisions. Even for Wealth tax purposes t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 11] Therefore, the sole dispute, in the instant case, was regarding the interpretation of the words 'property is let' in clause (c) of section 23(1). One interpretation suggested by the revenue was that the property should be actually let out in the relevant previous year. This interpretation was not correct, because as per clause (c) of section 23(1), the property can be vacant during whole of the relevant previous year. Hence, both these situations cannot coexist that the property is actually let out also in the relevant previous year, and that the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Even if it is interpreted so, it may lead to undesirable result because in some cases, if the owner has let out a property for one month or for even one day, that property would acquire the status of 'let out property' for the purpose of clause (c) of section 23(1) for the entire life of the property, even without any intention to let it out in the relevant year. Not only that, even if the property was let out at any point of time even by any previous 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. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under appeal the assessee could not get the suitable tenant account of hefty rent and security deposits. Thus, during the whole year, the assessee made continuous efforts to let out the property and under these circumstances, this property could be called to be let out property in terms of observations made in foregoing paras. Since the property had been held to be let out property, its annual letting value could only be worked out as per clause (c) of section 23(1) and since the rent received or receivable from the said property 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. [Para 18] 7. Respectfully following the same, we hold that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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