1985 (2) TMI 60 - AT - Income Tax

Summary

Issues:
Claim for relief under section 23(3)(b) of the Income-tax Act, 1961.

Detailed Analysis:
The judgment pertains to appeals concerning the claim of the assessee for relief under section 23(3)(b) of the Income-tax Act, 1961. The assessee, an individual residing in Kathmandu, Nepal, constructed a house in Udupi, which was primarily occupied by his son and a servant. The assessee contended that due to his employment elsewhere, he could not occupy the property, thus seeking remission of the annual letting value for the period not occupied by him. The revenue authorities denied the claim, arguing that the relief under section 23(3) was applicable only when the house was entirely vacant and locked up. The core issue revolved around the interpretation of section 23 and whether the assessee was entitled to relief despite the property being occupied by his son.

The tribunal analyzed the provisions of section 23 in detail. Section 22 mandates that the annual value of a property owned by the assessee is taxable under the head 'Income from house property'. Section 23(1) determines the annual value based on reasonable letting value or actual rental income if let out. Sub-section (2) of section 23 grants a 50% remission if the owner resides in the property. The crucial sub-section in question, 23(3), provides relief when the owner cannot occupy the property due to employment or other reasons, taxing a proportionate annual value if partly occupied. The tribunal referred to a previous court decision but distinguished the current situation under sub-section (3) which focuses on actual occupation by the owner. The tribunal emphasized the phrase 'actually occupied' and the legislative intent behind granting relief to owners not residing in the property due to employment elsewhere.

The tribunal delved into the interpretation of 'actually occupied' under section 23(3). It highlighted that the statute aims to provide relief to owners who are unable to reside in their property due to employment or other obligations elsewhere. The tribunal emphasized that the occupation by a relative, such as the son in this case, should not deprive the assessee of the relief intended for owners not in actual occupation. By disregarding the occupation by the son and focusing on the actual occupation by the assessee, the tribunal concluded that the assessee was entitled to the relief under section 23(3). Consequently, the tribunal set aside the orders of the lower authorities and directed the Income Tax Officer to recompute the total income for the relevant assessment years based on the actual occupation by the assessee.

In conclusion, the tribunal allowed the appeals, ruling in favor of the assessee's claim for relief under section 23(3)(b) of the Income-tax Act, 1961.