Property incapable to Let Out not taxable as House Property Income on Notional basis: ITAT [Read Order]

ITAT - disallowance - expenses - Income from House property - taxscan

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the property which is not capable of letting out cannot be taxable under the head House Property Income for the purpose of income tax.

In the instant case, the assessee had a self-occupied property in New Delhi and another property in Bharatpur. While completing the assessment proceedings, the Assessing Officer treated the Bharatpur property as self-acquired property and computed the ALV of the Delhi property and brought to tax.

The Tribunal noted that the farmhouse situated at Dera Mandi, New Delhi is self-occupied property, and the second property at Bharatpur is in the dilapidated condition, and not liable as such as per the submission of the Ld. AR. ALV of such property is NIL.

“The Assessing Officer treated the Bharatpur property as self-acquired property and computed the ALV of the Delhi property and brought to tax a sum of Rs. 7,44,055/-.The Ld. AR relied upon the decision of the Hon’ble Bombay High Court wherein to bring an income under Section 22, the property should be inherently capable of being let out, and since in the instant case, the property at Bharatpur is in dilapidated condition, as such, same is incapable for let out and hence the ALV of such property cannot be brought to tax. But after going through the decision the ratio as appears in the decision of the Hon’ble High Court is on a different issue and will not be applicable in the present case. Even the dilapidated property as its ALV and thus, the contentions of the Ld. AR does not sustain as the property always has the value. Therefore, Ground No. 6 to 6.1 are dismissed,” the Tribunal said.

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