2016 (12) TMI 1298 - HC - Income Tax

Income from house property - Chargeability of rent which cannot be realized resultingly according to Section 23(1)(c) - annual value of any property - Held that - Section 23(1) has three sub sections which have been set out earlier. Section 23(1)(b) and (c) would apply only to those properties which were actually let out and for which rent was actually received or receivable by the assessee. These provisions deal with the concept of real income and not notional income. Thus, the annual value of the properties like the ones in the case in hand which are more than one, owned by the assessee and which admittedly remained vacant throughout the previous year would not be assessed under Section 23(1)(c) but under Section 23(1)(a). The annual value would, therefore, be determined notionally as done in the case in hand by the Assessing Officer and concurrently upheld by the Commissioner and the Tribunal.The question of law is, therefore, answered in favour of the Revenue.

Summary

Issues:
- Interpretation of Sections 22 and 23 of the Income Tax Act, 1961
- Assessment of annual value of properties not let out

Analysis:

Interpretation of Sections 22 and 23 of the Income Tax Act, 1961:
The judgment involves a bunch of seven appeals challenging a common order passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh. The primary issue revolves around the interpretation of Sections 22 and 23 of the Income Tax Act. The appellant-assessee sought to press a substantial question of law concerning the chargeability of rent under Section 23(1)(c) of the Act. The factual background includes a search conducted on Jagdish Jeweller Group, leading to the appellant-assessee being found as the owner of multiple properties. The Assessing Officer determined notional rent for the vacant properties owned by the appellant-assessee, which was challenged through appeals.

Assessment of annual value of properties not let out:
The appellant-assessee contended that since the properties in question had not been let out and remained vacant in the previous years, their annual value should be considered as 'Nil' under Section 23(1)(c) of the Act. The argument focused on the provisions of Section 23, which outline the determination of annual property value based on whether the property is let out, vacant, or self-occupied. The appellant-assessee emphasized that the properties were vacant and hence, their annual value should not be assessed under Section 23(1)(c) but under Section 23(1)(a). The Assessing Officer's determination of notional rent was upheld by the Commissioner and the Tribunal, leading to the question of law being answered in favor of the Revenue.

In conclusion, the High Court dismissed all the appeals, upholding the Assessing Officer's determination of notional rent for the vacant properties owned by the appellant-assessee. The judgment provides a detailed analysis of the relevant sections of the Income Tax Act and clarifies the approach to be taken when assessing the annual value of properties that are not let out but remain vacant.