TMI Blog2022 (7) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... harged for the period commencing from 01.01.2013 to 31.03.2013 forming part of the rent free period of five months - Appellant documentary evidence in the forms of approvals obtained by the Lessee from the Electrical Department, Bangalore, Govt. of Karnataka and the civil interior works contract entered by the Lessee for making the Leased Property fit for occupation. However, the same were simply brushed aside by the CIT(A) - it is admitted facts that no rent has actually been received by the Appellant for the period of three months commencing from 01.01.2013 to 31.03.2013. In absence of any allegations by the Revenue regarding the bonafides of the transactions, the agreement between the parties is to be accepted. In our view, the Assessing Officer erred in attributing a notional rent for a period of three months without appreciating the nature of transactions - no efforts were made by the Assessing Officer to determine the monthly rental/rate at which the Leased Property might have been reasonably expected to be let out in terms of Section 23(1)(a) - actual annual rent received by the Appellant cannot be substituted by a notional rent without the Assessing Officer arriving a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut by the Appellant to the Lessee for (a) the period commencing from the date on which the possession was taken by the Appellant (i.e. 19.10.2012) till the date the aforesaid area was leased out (i.e. 31.12.2012) and (b) the period of 3 months commencing from 01.01.2013 to 31.03.2013 forming part of the rent free period of five months. Whereas in appeal for Assessment Year 2014-15 (ITA No. 6853/Mum/2019), the issue raised pertains to notional rent income assessed in the hands of the Appellant for a period of two months commencing from 01.04.2013 to 31.05.2013 being balance period of two months of the rent free period of five months. 5. We would first take up appeal for the Assessment Year 2013-14 (ITA No. 6852/Mum/2019), wherein following grounds have been raised: 1.1 On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) -4 (hereinafter referred to as the Ld. CIT(A ) erred in not applying the provisions of section 23(1)(c) of the Act to the property comprised of area 1,88,035 sq.Ft.) 4th, 5th, 8th and 9th floor of Tower A B and 10th floor of Tower C), which has been let out to Schneider Electric India Private Limited w.e.f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng electronic installations before getting approval for electrical safety on 18.09.2014. Thus, establishing that the Leased Property was not fit for occupation by the Lessee. He further submitted that the Appellant had also filed a copy of sample contract for carrying out civil interior works during the rent free period. However, the CIT(A) ignoring the aforesaid confirmed the order passed by Assessing Officer by holding that since the Occupancy Certificate was issued on 02.06.2012 the lease premised were fit for occupation and the Appellant had itself let go of rent for a period of five months. The Ld. Authorised Representative for the Appellant submitted that despite making all efforts the Leased Property was vacant from 19.10.2012 to 31.12.2012 and therefore, the Appellant is entitled to the benefit of vacancy allowance in terms of Section 23(1)(c) of the Act. Thereafter, for a period of 3 months commencing from 01.01.2013 to 31.03.2013 Nil rent was received by the Appellant and therefore, the Assessing Officer/CIT(A) were not justifying attributing notional rent for the aforesaid period. The Ld. Authorised Representative for the Appellant referred to the synopsis and relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner has let out a property for one month or for even one day, that property will acquire the status of let out property for the purpose of this clause 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 can 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. In our considered opinion, it is not at all relevant as to whether the property was let out in past or not. According to us, 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 were made to let it out, that property is covered by this clause 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. We feel that the words property is let are used in this clause to take out those properties fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bangalore, Govt. of Karnataka and the civil interior works contract entered by the Lessee for making the Leased Property fit for occupation. However, the same were simply brushed aside by the CIT(A). Further, it is admitted facts that no rent has actually been received by the Appellant for the period of three months commencing from 01.01.2013 to 31.03.2013. In absence of any allegations by the Revenue regarding the bonafides of the transactions, the agreement between the parties is to be accepted. In our view, the Assessing Officer erred in attributing a notional rent for a period of three months without appreciating the nature of transactions. Further, no efforts were made by the Assessing Officer to determine the monthly rental/rate at which the Leased Property might have been reasonably expected to be let out in terms of Section 23(1)(a) of the Act. The actual annual rent received by the Appellant cannot be substituted by a notional rent without the Assessing Officer arriving at a finding that the Leased Property is can be reasonably expected to be let out for a higher sum. In view of the aforesaid, we delete the addition of notional rent made by the Assessing Officer for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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