2015 (10) TMI 746 - AT - Income Tax

Income from House property - Computation of annual letting value (ALV) in respect of the property at K.K.Nagar Chennai - Held that - Following the order of the co-ordinate bench of this Tribunal in the case of the wife of the assessee, this issue is set aside to the record of the AO for determination of the ALV in respect of the property in question after considering the property tax record filed by the assessee in terms of the direction given in the order. - Decided in favour of assessee for statistical purpose Vacancy allowance - Held that - As regards the vacancy allowance claimed by the assessee, we note that the assessee never let out the property at Jubilee Hills, Hyderabad. Therefore, the question of remaining the property vacant during the year for the purpose of vacancy allowance does not arise. Accordingly, the claim of the assessee is devoid of any merit, when the assessee never let out the property in question. Hence, the claim of vacancy allowance is rejected - Decided against assessee. Disallowance of cost of improvement - Held that - Though assessee has not produced any supporting evidence regarding the expenditure incurred by the assessee on account of improvement of the property in question, however, as pointed out by the learned counsel for the assessee, the property in question was purchased by assessee vide sale deed dated 19-10-1995 and as per the schedule of the property, there is no mention of any construction or any structure on the said property purchased by the assessee. We note that the assessee had sold the property vide sale deed dated 2nd December, 2008 and as per the schedule of the property, being part of the sale deed dated 2nd December, 2008 the property is described as House No. . Therefore, prima facie it appears that what is sold by the assessee is a constructed property. However, it is a matter of verification and examination. Accordingly, this issue is set aside to the record of the AO to examine the facts of any construction physically existing on the property in question at the time of sale, in comparison to the state of property at the time of purchase vide sale deed dated 19-10-1995. - Decided in favour of assessee for statistical purpose

Summary

Issues involved:
1. Computation of annual letting value (ALV) for properties in Chennai and Hyderabad.
2. Disallowance of vacancy allowance.
3. Disallowance of cost of improvement.

Issue 1: Computation of annual letting value (ALV) for properties in Chennai and Hyderabad:
The appeal concerns the computation of ALV for properties in Chennai and Hyderabad for the assessment year 2009-10. The Tribunal noted that the assessee, a co-owner of the properties, had previously faced a similar issue with another property. In that case, the Tribunal considered the ALV estimation based on Municipal value for properties in Bangalore but rejected the estimation for the property in Hyderabad due to the lack of proof of Municipal valuation. The Tribunal directed the AO to re-evaluate the ALV for the Hyderabad property after considering the property tax records filed by the assessee. Following this precedent, the Tribunal set aside the issue for the current appeal to re-assess the ALV for the property in Chennai based on the property tax record.

Issue 2: Disallowance of vacancy allowance:
The second ground raised by the assessee pertained to the disallowance of vacancy allowance. The Tribunal referred to a previous case involving the assessee's wife, where a similar claim for vacancy allowance was rejected as the property in question was never let out. Consequently, the Tribunal dismissed the claim for vacancy allowance in the current appeal as well, as the property remained unlet throughout the year. Thus, the ground related to vacancy allowance was dismissed.

Issue 3: Disallowance of cost of improvement:
The third ground raised by the assessee focused on the disallowance of the cost of improvement. The Tribunal referred to a previous case involving the assessee's wife, where the absence of supporting evidence for improvement expenditure was noted. However, based on the property sale deeds and the nature of the property, the Tribunal set aside the issue for the AO to verify if any construction or improvement work was carried out by the assessee on the property. The Tribunal emphasized that if evidence of construction or improvement work is found, the claim should not be dismissed solely due to a lack of expenditure bills. Following this precedent, the Tribunal set aside the issue for the current appeal for the AO to re-examine the facts regarding any construction or improvement on the property.

In conclusion, the appeal by the assessee was partly allowed for statistical purposes, with specific directions given for the re-assessment of ALV for the property in Chennai, re-evaluation of the cost of improvement, and dismissal of the claim for vacancy allowance. The judgment was pronounced on 24th September 2015 by the Tribunal.