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TMI Blog2025 (4) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... rent received is less than municipal rateable value then the rental value should be adopted as ALV. 2 (ii) Whether on the facts and circumstances of the case and in law, the Ld CIT(A) has erred in directing to adopt the Municipal rateable value for computation of ALV without appreciating the fact that AO has determined the ALV on the basis of Section 23(1)(a) of the I.T. Act, 1961 i.e. sum for which the property might reasonably be expected to Ict from year to year 3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in principle by not appreciating the contention of the AO in determining the annual value of the property 4 Whether on the facts and circumstances of the case and in law, the CIT(A) has erred in not applying of the provisions of section 23(1)(a), 23(1)(b), 23(1)(c) of the I. T. Act 1961. 5 Whether on the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs. 36,56 800/- received as transfer fees under the Head income from other sources' ignoring the decision of the Hon'ble Special Bench, in Walkeshwar Triveni Co-Op Hsg. Society 83 ITO 159 (Mum) (SB), wherein it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt as ALV in respect of all the properties. Secondly, transfer fee of Rs.36,56,800/- was claimed as exempt by the assessee on the principle of mutuality which has been added to its income by the ld. AO after holding that the concept of mutuality is restricted to collection of maintenance charges from its 48 members who enjoyed the benefits from the society. The ld. AO has held that there is no mutuality when the vacant premises are sold to a third party at the market rates and not at the cost incurred by the assessee for its construction. He has accordingly, added the amount of transfer fee to the income of the assessee under the head 'income from other sources.' 6. Ld. CIT(A) vide order dated 27/09/2023 has deleted the addition on account of transfer fee by holding that the transfer fee is covered by the principle of mutuality. He has followed the order of the Co-ordinate Bench for A.Y.2017-18 in this regard. In respect of addition of Rs.85,01,001/- on account of enhanced ALV on rented properties, the same has also been deleted in view of the order of the Co-ordinate Bench for A.Y.2017-18. However, with regard to addition of Rs.3,26,82,720/- on account of ALV on vacant pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad 'income from house property'. This was done on the basic premise that assessee's case falls under the provisions of Section 23(1)(a) of the Act and accordingly, the ld. AO observed that he is entitled to consider the fair rental value even for the vacant property. 4.4. The ld. CIT(A) on analysing the various case laws relied upon by the ld. AO in his assessment order as well as by the assessee before him, held that in respect of vacant properties, annual value will be the municipal value u/ s.23(1)(a). The assessee pleaded before the ld. CIT(A) that though these five properties as tabulated supra were remaining vacant during the year under consideration, most of them were indeed let out in subsequent years. In fact the assessee genuinely intended to let out these properties but could not find out a suitable tenant thereon. Hence, the property remained vacant for the reason which was beyond the control of the assessee herein. It was also specifically pleaded that the said properties could not be used by the assessee for any other purpose other than letting out hence, intention to let out those properties, was proved. The ld. CIT(A) brushed aside this argument of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to attract section 23(l)(c), the following requirements must be fulfilled (i) the property, or any part thereof, must be let; and (ii) it should have been vacant during the whole or any part of the previous year ; and (iii) owing to such vacancy the actual rent received or receivable by the owner in respect thereof should be less than the sum referred to in clause (a ). It is only if these three conditions are satisfied would clause (c) of section 23(1) apply in which event the amount received or receivable, in terms of clause (c) of section 23(1), shall be deemed to be the annual value of the property. Clause (c) does not apply to situations where the property has either not been let out at all during the previous year or, even if let out, was not vacant during the whole or any part of the previous year. Under the Explanation to section 23(1), for the purposes of clause (b) or (c), the amount actually received or receivable by the owner shall not include the amount of rent which the owner cannot realize. Self- occupation by the owner of a house would require the annual value of such house, or part of the house, to be taken as nil under section 23(2)(a) and, where the house c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST v. Modi Sugar Mills Ltd. [1961] 12 STC 182 (SC); CIT v. V. MR. P. Firm, Muar, AIR 1965 SC 1216 ; CED v. Kantilal Trikamlal [1976] 105 ITR 92 (SC); Aphali Pharmaceuticals Ltd. v. State of Maharashtra [1989] 4 SCC 378 ; Baidyanath Ayurved Bhawan (P.) Ltd. v. Excise Commissioner AIR 1971 SC 378. The question as to what is covered must be found out from the language according to its natural meaning fairly and squarely read. IRC v. Duke of Westminster [1936] AC 1 (HL), A.V. Fernandez's case (supra) Saraswati Sugar Mills v. Haryana State Board [1992] 1 SCC 418). The meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the court as to that is just or expedient. The expressed intention must guide the court. CIT v. Shahzada Nand & Sons [1966] 60 ITR 392 (SC). The Legislature does not waste its words. Ordinary, a grammatical meaning is to be assigned to the words used while interpreting a provision to honour the rule. The Legislature chooses appropriate words to express what it intends and, therefore, must be attributed with such intention as is conveyed by the words employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perties which are held by the owner for self-occupation from the ambit of the said clause. As noted hereinabove, section 23(2)(a) takes out a self-occupied residential house, or a part thereof, from the ambit of section 23(1) of the Act. Likewise, under section 23(2)(b ), where a house cannot actually be occupied by the owner, on account of his carrying on employment, business or profession at any other place requiring him to reside at such other place in a building not belonging to him, the annual value of the property is also required to be treated as nil, thereby taking it out of the ambit of section 23(1) of the Act. Section 23(3)(a) makes it clear that section 23(2) would not apply if the house, or a part thereof, is actually let during the whole or any part of the previous year. Thus, only such of the properties which are occupied by the owner for his residence, or which are kept vacant on account of the circumstances mentioned in clause (b) of section 23(2), fall outside the ambit of section 23(1) provided they are, as stipulated in section 23(3)(a), not actually let during the whole or part of the previous year. Clause (c) was not inserted to take out from its ambit propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal are as under :- "6.6. We find that in the aforesaid decision, the Hon'ble Supreme Court had categorically held in para 24 of the notification dated 09/08/2001 which has been heavily relied upon by the ld. AO in the instant case before us. It is applicable only to Co-operative housing societies and not applicable to a premises society (like assessee herein). Hence, reliance placed by the ld. AO on the said notification does not advance the case of the revenue. 6.7. The ld. DR also pointed out that the decision of Mumbai Tribunal in the case of Hatkesh Co-operative Housing Society Ltd., relied upon by the ld. CIT(A) in ITA Nos. 494- 500/Mum/2011 dated 04/09/2013 has been subsequently reversed by the Hon'ble Bombay High Court reported in 75 Taxmann.com 39. The Revenue had preferred a Special Leave Petition against the said decision before the Hon'ble Apex Court and the same has been admitted by the Hon'ble Supreme Court which is reported in 84 Taxmann.com 240. We find that this argument of the ld. DR need not be gone into at all in view of the fact that as on date, the issue in dispute before us is already decided by the Hon'ble Apex Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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