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2015 (6) TMI 1073 - ITAT MUMBAI

2015 (6) TMI 1073 - ITAT MUMBAI - TMI - Carry forward losses u/s.71B - income computed under the head "Income from House Property” - Held that:- CIT(A) has directed the AO to allow carry forward losses under the head income from house property u/s.71B of the Income Tax Act to be set off against the income under the same head. - As the facts during the year under consideration are pari materia with the case law relied on by the ld. AR in case of Aryabhata Properties Limited (2013 (7) TMI 103 .....

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tment): 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 brief are that the AO in his assessment order, was of the opinion that since the assessee company was f .....

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laim of the assessee for carry forward of loss under the head Income from House Property as provided for in Section 71B of the Income Tax Act, 1961. 3. Ld. AR placed on record order of the Tribunal in the case of M/s Aryabhata Properties Limited, ITA No.6928/Mum/2011, order dated 31-7-2013, wherein exactly similar issue was decided in favour of the assessee. 4. We have carefully gone through the order of the Tribunal, wherein assessee constructed a building in the year 2006. In the assessment ye .....

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e 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. .....

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dings. This observation of CIT(A) is factually not correct as the assessee vide letter dated 07.12.2009 to AO (at Page-4 of the letter) clearly stated the Municipal ratable value at ₹ 10 per sq.ft. and enclosed the working as Annexure-5 and 6 to the letter. These contentions were however, ignored by Assessing Officer. 6. It was the contention that provisions of section 23(1)(c) will apply as the property is held with an intention to let out which was in fact let out in later year and effor .....

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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 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 w .....

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hat the property should be actually let out during any time prior to the relevant previous year and then only, it could be said that the property is let out and clause (c) would be applicable. The tense of the verb used prior to the word 'let' is present tense and not past tense. It means that the provisions of clause (c) talk regarding the relevant previous year and not of any earlier period and if that be so, the contention of the revenue was not acceptable. [Para 13] Now the question .....

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perty is let' cannot mean actual letting out of the property because had it been so, there was be no need to use the word 'actually' in subsection (3) of section 23. Regarding the scope of referring to actual letting out in preceding period, there was no force in the contention of the revenue, as the Legislature has used the present tense. 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 ev .....

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t, 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 bu .....

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was entitled to purchase the property for its let out and to earn rental income. Copy resolution of board of directors was also placed on record, where from it was evident that one of the directors was authorized take necessary steps to let out the property in question. The assessee had also fixed the monthly rent and the security deposits of the property. Consequent to the resolution, the assessee had approached various Estate and Finance Consultants for letting out the property and the request .....

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