TMI Blog2004 (10) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... d to as "the Act", for opinion to this court: "Whether, on facts and in the circumstances of the case, the assessee is entitled to the relief under proviso (c) to section 23(1) of Income-tax Act, 1961?" Briefly stated the facts giving rise to the present reference are as follows: The present reference relates to the assessment year 1979-80 of which the relevant previous year ends on March 31, 1979. The applicant is an individual. He derives income from salary and property. He owns a property situated at B-40, Nirala Nagar, Lucknow. The ground floor of the property was let out on August 1, 1978, to the Fertilizer Corporation of India Ltd. on a monthly rent of Rs. 4,500 out of which Rs. 1,250 was payable towards the installation of booster pump and other fixtures. The applicant claimed deduction under clause (c) of the second proviso to section 23(1) of the Act. He claimed the total deduction of Rs. 6,400 on the ground that there were four units in the said property. The Income-tax Officer, however, disallowed the deduction/relief under section 23(1) of the Act on the ground that the property has been let out for non-residential purpose. Feeling aggrieved, the applicant preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its, the erection of which is completed after the 31st day of March, 1978, but before the 1st day of April, 1982, for a period of five years from the date of completion of the building, be reduced by a sum equal to the aggregate of- (i) in respect of any residential unit whose annual value as so determined does not exceed two thousand four hundred rupees, the amount of such annual value; (ii) in respect of any residential unit whose annual value as so determined exceeds two thousand four hundred rupees, an amount of two thousand four hundred rupees;" From a reading of the aforesaid clause it will be seen that for claiming the relief under the aforesaid provisions the building should be (i) a residential one, it may comprise one or more residential units; (ii) its erection should be completed after March 31, 1978, but before April 1, 1982; (iii) the deduction while computing the annual value is available for a period of five years from the date of completion of the building; and (iv) the amount of deduction is Rs. 2,400 in respect of any residential unit whose annual value so determined exceeds Rs. 2,400. If the conditions mentioned in items (i) to (iii) above are fulfilled, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purposes of the section, it must have a separate annual value. In the case of S. C. Majumdar v. CIT [1983] 141 ITR 486, the Calcutta High Court has held that the proviso to section 23(1) of the Act uses the expressions "building" and "residential unit". These are not defined in the Act and have to be given their ordinary meaning. The building should certainly be one habitable and complete and it may be either one storeyed or have more than one storey. Hence on reading clause (b) of the second proviso to section 23(1) of the Act, it seems that if the construction of a building is started after April 1, 1961 and is completed after March 31, 1970, the assessee would be entitled to the deduction in respect of the building as mentioned in clause (b)(i) of the second proviso to section 23(1) of the Act. In the case of Dr. J. V. Desai v. CIT [1985] 154 ITR 828 the Andhra Pradesh High Court has held that the benefit envisaged under clause (b) of the second proviso to section 23(1) of the Act is to a building comprising one or more residential units constructed during the period specified therein and is not dependent upon its user by the tenant to whom the building was subsequently le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1) of the Act. Had the object of the Legislature been to allow this concession irrespective of the user of the building, it was not; necessary to qualify the word "unit" by the expression "residential". An owner may construct a building with self-contained floors with the object of letting out the same to tenants, but such letting out has to be for the purpose of residence of the tenants and not otherwise. Admittedly, in this case, the units, which were let out to the bank, were not constructed as residential units. A residential unit is that which is used as a residence. A distinction has been made between a residential unit in the occupation of the owner for the purposes of his own residence and a residential unit let out to tenants. Where the residential unit referred to in the second proviso to section 23(1) of the Act is in the occupation of the owner for the purposes of his own residence, he does not get the concession as provided therein. Where, however, a residential unit is not in the occupation of the owner but has been let out to tenants for the purpose of their residence, the concession as admissible under the second proviso to section 23(1) will be available to the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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