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Issues: Interpretation of Section 9(1), para. (7) of the Act regarding deductions for vacancies in annual value of residential houses not used by the assessee during the year of assessment. Entitlement of the assessee to deduct collection charges under para. (6), Sub-section (1), Section 9.
Analysis: 1. The judgment addresses various points raised in a Letter of Reference, with some points resolved through compromise or agreement between the department and the assessee. The remaining issues pertain to the deduction of vacancies in the annual value of residential houses and the entitlement to deduct collection charges. 2. The assessee, a wealthy nobleman, owns residential houses across the country kept open for his occupation. Some of these houses were not used for residence or hospitality during the assessment year, leading to a dispute regarding deductions under Section 9(1), para. (7) of the Act. 3. The first issue revolves around the interpretation of vacancies in Section 9(1), para. (7) concerning deductions for periods when the houses were not used for residence. The court distinguishes between "occupation" and "unused," stating that a house cannot be both occupied by the owner and vacant simultaneously. The provision primarily applies to houses habitually let to tenants or cases where houses are dismantled, not to owner-occupied residences. 4. The first question posed to the court is whether allowances should be given for vacancies under Section 9 of the Act for houses not used by the assessee during the year. The court answers this question in the negative, emphasizing the specific circumstances under which vacancies can be considered for deductions. 5. The second issue concerns the entitlement of the assessee to deduct collection charges under para. (6), Sub-section (1), Section 9. The argument is based on the notional income concept of annual value and the cost of collecting rent if the property were let. The court rules that collection charges can only be deducted if actually incurred, limited to a prescribed maximum, drawing parallels with deductions for insurance premiums and mortgage interests. 6. The judgment concludes that the two points addressed encompass all matters in the reference, with costs awarded to the opposite party as per the decision. Justice Sankara Balaji Dhavle agrees with the judgment rendered by Chief Justice Courtney Terrell. This detailed analysis of the judgment provides insights into the court's interpretation of relevant legal provisions and the application of principles to resolve the issues raised in the case.
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