While hearing the appeal filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals)1, the Chennai bench of the Income Tax Appellate Tribunal (ITAT) has held that the annual value of property let out or vacant whole or part of the previous year should be computed as per section 23(1(c) of the Income Tax Act,1961.
The assessee, M/s. Asfa Technologies & BPO Pvt. Ltd owns the commercial property from which the rental receipt was the source of income from the assessment year 2008-09 up to the assessment year 2011-12. The assessee did not carry on any business during the previous year relevant to the assessment year 2013-14 and did not receive any rental income as the whole commercial property was lying vacant. The assessee has filed its return of income for the assessment year 2013-14 on 29.09.2013 admitting a loss of Rs.74,61,184/- under the head ‘income from house property’.
The Assessing Officer determined a gross annual value of Rs.1,15,94,161/- and computed income from house property at Rs.23,91,146/- after allowing standard deduction u/s.24(a) and interest on loan u/s.24(b) of the Act.
The assessee has contended that when the property was let out and it became vacant for the whole or any part of the year, then the annual letting value of the property needs to be computed u/s.23(1)(c) of the Income Tax Act, 1961, but not u/s.23(1)(a) of the Act.
As per section 23(1)(c), it was evident that if any property was let and was vacant during the whole or any part of the previous year, then the annual value of the said property should be computed in terms of provisions of section 23(1)(c) of the Act and the above said section does not apply, in the case where the property was not let out at all.
The Tribunal observed that the assessee has made his best efforts to let out the property which was evident from e-mail correspondence between the assessee and agents and viewed that the assessee has rightly computed the annual letting value of the property as per provisions of section 23(1)(c) of the Income Tax Act, 1961.
While allowing the appeal, Shri Mahavir Singh, vice-president and Shri G Manjunath, accountant member held that “the Assessing Officer has erred in computing annual letting value of the property in terms of section 23(1)(a) of the Act. Hence, we direct the Assessing Officer to delete the addition made towards income from house property.”
The Appellant was represented by Mr R Viswanathan and the Respondent was represented by Ms Hema Bhupal.
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