1983 (2) TMI 101 - AT - Income Tax

Summary

Issues:
1. Assessment of income under the head 'Income from house property' for a property deliberately kept vacant with the intention of selling.
2. Disallowance of vacancy allowance claimed by the assessee.
3. Interpretation of section 24(1)(ix) and the Explanation regarding vacancy allowance.

Detailed Analysis:

1. The judgment involves the assessment of income under the head 'Income from house property' for a property deliberately kept vacant with the intention of selling. The assessee, a registered firm, owned a property in New Delhi, which was agreed to be sold to another party. The property remained vacant for a specific period, and the Income Tax Officer (ITO) disallowed the claim for 'vacancy allowance,' stating that the property was deliberately kept vacant for sale and not let out to tenants. The Commissioner (Appeals) upheld the assessment, citing legal precedents and the fact that the property was legally owned by the assessee during the relevant year.

2. The issue of disallowance of the vacancy allowance claimed by the assessee was raised in the appeal. The Commissioner (Appeals) rejected the claim based on the interpretation of section 24(1)(ix) of the Income-tax Act, which governs deductions for vacant properties that are let out. The Commissioner referred to legal provisions and judgments to support the decision, emphasizing that the vacancy allowance cannot be claimed if the property was not let out during the relevant period, regardless of the intention behind keeping the property vacant.

3. The interpretation of section 24(1)(ix) and the Explanation regarding vacancy allowance was a crucial aspect of the judgment. The Tribunal considered arguments presented by the representative for the assessee, who relied on legal references and the Explanation to support the claim for vacancy allowance. However, the Tribunal analyzed the legislative intent behind the provision and the Explanation added in 1977, clarifying that the vacancy allowance can only be claimed if the property was let out for a part of the year. The Tribunal highlighted the Supreme Court's interpretation of the main provision and concluded that since the property was not let out during the relevant year, the claim for vacancy allowance was rightly disallowed by the tax authorities.

In conclusion, the Tribunal dismissed the appeal by the assessee, upholding the assessment of income from the vacant property under the head 'Income from house property' and affirming the disallowance of the vacancy allowance claim based on the provisions of section 24(1)(ix) and the Explanation.