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TMI Blog2011 (1) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation of his income from house property. The appellant, vide letter dated March 23, 2005, contended that, as per section 23(1)(c) of the Act, the annual value of the flat was nil and, hence, he was not liable to tax. The assessing authority, in his order of assessment dated March 28, 2005, held that section 23(1)(c) would apply only when the property was let out ; what could be seen from the computation of income was that this property was not let out during the accounting year ; the question of allowing any deduction on account of vacancy would, therefore, not arise ; in the earlier year also, i.e., the accounting year relevant to the assessment year 2001-02, the property was let out only for a period of 15 days ; and hence the annual value must be taken in terms of section 23(1)(a) of the Act. The annual value was thus estimated at Rs. 1,44,000. Aggrieved thereby the appellant carried the matter in appeal to the Commissioner of Income-tax (Appeals)ƒ_"I, Hyderabad who, in his order dated December 5, 2005, held that the annual let out value of the property could not be taken as nil ; and the order of the Assessing Officer computing the annual let out value (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual rent should only be taken as the income from property ; and the Legislature had taken care to see that the assessee was not unduly taxed on that part of the income where, despite such letting out, the property remained vacant either for the whole or a part of the year, and the actual rent fell below the notional value. This benefit, provided in section 23(1)(c) of the Act, was to be extended only where the property was let out, and the actual income had fallen from what it would have been had the property not remained vacant; the benefit could not be extended to a case where the property was not let out at all ; if it was not let out, then the notional value would be the income from the property ; if the assessee's argument was accepted then, in addition to the two cases where the annual let out value could be taken to be nil, there could also be a third eventuality to take the annual let out value at nil which was not envisaged by any of the provisions of the statute; and it would also render section 23(1)(a) otiose, and the scope of section 23(2) would get unduly extended. The Income-tax Appellate Tribunal concluded that, in cases where the property had not been let out at al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot provide for such an eventuality, section 23 was amended by the Finance Act, 2001 with effect from April 1, 2002, and clause (c) was inserted to section 23(1) to deal with such a situation. Section 23 of the Income-tax Act, which fell for consideration in Liquidator of Mahamudabad Properties P. Ltd. v. CIT [1980] 124 ITR 31 (SC) ; [1980] 3 SCC 482, was as it stood prior to its amendment by the Finance Act, 2001, with effect from April 1, 2002. The assessment year, in the present case, is 2002-03 and it is the amended section 23 which is applicable, and not the pre-amended provision. Under the amended section 23(1)(c), where the property, or any part thereof, is let and was vacant during the whole or any part of the previous year and, owing to such vacancy, the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable shall be the annual value of the property. The notes on clauses relating to the amendment to section 23(1) reads thus ([2001] 248 ITR (St.) 35, 118) : "Clause 14 seeks to substitute new section for section 23 of the Income-tax Act relating to determination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (10th edition) as under : "The new section provides that the higher of the amount as between what is actually received or receivable and the annual value in relation to what the property might reasonably fetch if let from year to year would be adopted as annual value for purposes of determination of property income. In the result, even where the property is vacant for part of the year, if the rent received for the remaining part is higher than the annual value, it is such annual value which will be adopted because for the component of actual rent what is receivable or received during the year, whichever is higher, will have to be adopted, though it is not so expressly spelt out. But if the actual rent received or receivable is less than the annual letting value, but not because of vacancy, the actual receipt will be the annual value. This impact is more implied than express. But in view of the Board's Circular No. 14 of 2001, this is a matter which is required to be borne in mind, since such an interpretation would dispense with the need for separate deduction for vacancy allowance, though the interpretation as now placed may not take into consideration, where the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner, that if there is an intention to let out the property during the relevant year, coupled with efforts being made for letting it out, it must be held the property is let, would necessitate reading words into section 23(1)(c) which do not exist. The words "where the property is let" cannot be read as "where the property is intended to be let". The provisions of a tax statute must be strictly construed. The words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning. (Gurudevdatta VKSSS Maryadit v. State of Maharashtra [2001] 4 SCC 534). The Legislature may be safely presumed to have intended what the words plainly say. (Bhaiji v. Sub-Divisional Officer, Thandla [2003] 1 SCC 692). The intention of the legislation must be found in the words used by the Legislature itself. The question is not what may be supposed and has been intended but what has been said. (Unique Butyle Tube Industries P. Ltd. v. Uttar Pradesh Financial Corporation [2003] 113 Comp Cas 374 (SC) ; [2003] 2 SCC 455). The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to brush aside words in a statute, as being inapposite surplusage, if they can have a proper application in circumstances conceivable within the contemplation of the statute. (Gurudevdatta [2001] 4 SCC 534, Manohar Lal v. Vinesh Anand [2001] 5 SCC 407). When the legislative intent is found specific mention and expression in the provisions of the Act itself, the same cannot be whittled down or curtailed and rendered nugatory. (Bharathidasan University v. All India Council for Technical Education [2001] 8 SCC 676). The effect should be given to all the provisions and a construction that reduces one of the provisions to a "dead letter" must be avoided. (Anwar Hasan Khan v. Mohd. Shafi [2001] 8 SCC 540). The courts should not, ordinarily, add words to a statute or read words into it which are not there, especially when a literal reading thereof produces an intelligible result. (Delhi Financial Corporation v. Rajiv Anand [2004] 11 SCC 625 ; [2006] 131 Comp Cas 285 (SC)). A construction which requires, for its support addition or substitution of words, or which results in rejection of words, has to be avoided. (Gwalior Rayons Silk Manufacturing (Weaving) Co. Ltd. v. Custodian of Veste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not beyond. For that part of the previous year during which the property was not let out, but was vacant, clause (c) would not apply and it is only clause (a) which would be applicable, subject of course to sub-sections (2) and (3) of section 23 of the Act. Such a construction does not lead to any hardship, inconvenience, injustice, absurdity or anomaly and, therefore, the rule of ordinary and natural meaning being followed cannot be departed from. (Sneh Enterprises [2006] 7 SCC 714). We are in agreement with the interpretation of section 23(1)(c) by the Tribunal, and are of the opinion that the benefit thereunder cannot be extended to a case where the property was not let out at all. We find no merit in the submission that the words "property is let" are used in clause (c) to take out those properties which are held by the owner for self-occupation from the ambit of the said clause. As noted herein-above, section 23(2)(a) takes out a self-occupied residential house, or a part thereof, from the ambit of section 23(1) of the Act. Likewise, under section 23(2)(b), where a house cannot actually be occupied by the owner, on account of his carrying on employment, business or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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