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2016 (7) TMI 942 - AT - Income TaxALV of the property remained vacant for the whole year - Held that - As from a reading of another provision i.e. subsection (3) of section 23 of the Act, where the legislatures in their wisdom have used the word house is actually let . This also shows that the expression property is let cannot mean actual letting out of the property because had it been so, there was be no need to use the word actually in sub-section (3) of section 23 of the Act. Applying the purposive interpretation, the expression property is let has to be read in contrast to property is self occupied to arrive at its true purport. We simultaneously note on facts that the property has been actually let out in the financial year 2006-07 as noted above. It cannot be reckoned to be in the control of the assessee to let out the property throughout necessarily. The decision of Hon ble Andhra Pradesh High Court in the case of Vivek Jain (2011 (1) TMI 897 - Andhra Pradesh High Court ) relied upon by the revenue cannot be read in a manner that if the property remains vacant throughout the year, section 23(1)(c) do not apply at all more so when the property was let out in proceeding or subsequent year. Therefore, in the totality of the circumstances and having regard to the provisions of the Act, we are of the view that the ALV of the property at Dande Towers which remained vacant for the whole year has to be assigned Nil value in terms of section 23(1)(c) of the Act. Accordingly, the order of the CIT(A) stands modified to this extent.
Issues:
Interpretation of provisions of section 23(1)(c) of the Income Tax Act, 1961 for determining Annual Letting Value (ALV) of properties at Prathamesh Plaza and Dande Towers in Nashik. Analysis: 1. The appeal concerns the order of CIT(A)-I, Nashik related to the assessment year 2009-10 under section 143(3) of the Income-tax Act, 1961. The appellant raised grounds of appeal regarding the interpretation of section 23(1)(c) for determining ALV of properties. 2. Despite the absence of the appellant during the hearing, the respondent's representative appeared. The appeal was disposed of ex-parte in favor of the respondent in accordance with Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963. 3. The appellant contested the ALV determination by the Assessing Officer for Prathamesh Plaza and Dande Towers in Nashik. The ALV for Prathamesh Plaza was agreed upon at ?40,000 per annum during the appellate proceedings. For Dande Towers, the ALV was confirmed at ?1,51,200 based on the actual rent received in a previous year. 4. The Assessing Officer denied the application of section 23(1)(c) for properties that remained vacant throughout the year. The appellant argued that the ALV should be nil as the properties were vacant despite efforts to let them out. 5. Section 23(1)(c) states that if a property is let and vacant during the previous year, the ALV should be determined based on the actual rent received. The Tribunal noted that the property being let and vacant simultaneously is contradictory. The ALV should be zero if efforts were made to let the property but were unsuccessful. 6. The Tribunal disagreed with the revenue's interpretation that the property must be actually let out in the previous year. The property's history of being rented out in a prior year supports the appellant's claim for nil ALV due to vacancy in the relevant year. 7. The Tribunal modified the CIT(A)'s order to assign nil ALV to the property at Dande Towers that remained vacant throughout the year. Ground no. 1 was partly allowed, rendering ground no. 2 infructuous. In conclusion, the Tribunal partially allowed the appeal, modifying the ALV determination for the property at Dande Towers based on the interpretation of section 23(1)(c) of the Income Tax Act, 1961.
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