The Income Tax Appellate Tribunal (ITAT), Chennai held that Income Tax on Rental Income on a Notional Basis is not Applicable If Assessee could not find a Tenant for a Relevant Assessment Year.
The assessee, M/s. Asfa Technologies & BPO Pvt Ltd did not carry on any business during the previous year relevant to the assessment year 2013-14. The assessee’s source of income is rental receipts from commercial property right from the assessment year 2008-09 up to the assessment year 2011-12 and from the assessment year 2015-16 to 2016-17.
However, for the assessment years, 2012-13 to 2014-15 the assessee 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’s income from house property.
The case was selected for scrutiny and during the course of assessment proceedings, the Assessing Officer noticed that the assessee has adopted gross annual value at Nil for the property, as the same was vacant throughout the year, therefore, after considering relevant submissions of the assessee computed annual value of the property as per provisions of section 23(1)(a) of the Income Tax Act, 1961, and determined 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.
Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). the CIT(A) upheld additions made by the Assessing Officer towards income from house property on the basis of computation of annual letting out the value of the property as per provisions of section 23(1)(a) of the Income Tax Act, 1961. Aggrieved by the CIT(A) order, the assessee is in appeal before the Tribunal.
The bench consisting of Mahavir Singh, Vice President and G Manjunatha, Accountant Member held that “In this case, property was let out earlier, however, it was vacant during the impugned assessment year owing to nonavailability of tenants Further, the assessee has made his best efforts to let out the property which is evident from e-mail correspondence between the assessee and agents however, could not get tenants for relevant period. Therefore, we are of the considered view that the assessee has rightly computed annual letting value of the property as per provisions of section 23(1)(c) of the Income Tax Act, 1961.”
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