1985 (1) TMI 101 - AT - Income Tax

Summary

Issues:
1. Interpretation of Section 23(2) regarding the limitation on income from multiple dwelling houses.
2. Assessment of fair rental income for a property in Bombay.

Analysis:

Issue 1: Interpretation of Section 23(2)
The case involved the interpretation of Section 23(2) of the Income Tax Act regarding the limitation on income from multiple dwelling houses. The assessee argued that the income from all dwelling houses should be limited to 10% of other income, citing the decision in CIT vs. Vegetable Produced Ltd. The Revenue authorities, on the other hand, contended that only one house should be chosen for the purpose of Section 23(2)(i), and the proviso does not extend to all dwelling houses. The ITAT held that the introduction of sub-section (2A) to Section 23 clarified that the benefit of the 10% ceiling under the proviso to Section 23(2)(ii) is not applicable to other dwelling houses not chosen by the assessee. Therefore, the income from the second dwelling house should be determined under Section 23(1) without limiting it to 10% of other income. The ITAT upheld the decision of the Revenue authorities on this point, dismissing the appeal.

Issue 2: Assessment of fair rental income for property in Bombay
Regarding the assessment of fair rental income for a property in Bombay, the ITAT considered the location and size of the flat in Khar, which had not been let out. The ITAT found the estimate of Rs. 750 per month for the property reasonable, considering the covered area of 853 sq. yds. in a good locality like Khar. The ITAT concluded that the estimate made by the Revenue authorities was fair and upheld their decision. Consequently, the ITAT dismissed the appeals filed by the assessee.

In conclusion, the ITAT clarified the interpretation of Section 23(2) and affirmed the Revenue authorities' decision regarding the limitation on income from multiple dwelling houses and the assessment of fair rental income for the property in Bombay.