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TMI Blog2012 (8) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... cation is reproduced herein below: "1. The Ld. CIT(A)-VIII, Ahmedabad, has erred in law and on facts in directing the A. O. to adopt the ALV of the property at the figure of actual rent i.e. Rs.28,12,759/- as against the net realizable rent of Rs.87,02,002/-." 3. The assessee is a Private Limited Company engaged in the business of letting out of commercial property filed its return of income for AY 2004-05 on 25-08-2004 declaring loss of Rs.4,40,427/. The return was processed u/s 143(1) of the Act on 25-09-2004. Subsequently, after recording the reasons the assessment was reopened by issuing notice u/s.148 of the Act and assessment was completed by disallowing interest as deduction from the rental income of the assessee and finall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction during the relevant period and was not ready for occupation and hence the notional rent for the same cannot be considered for the purpose of annual value. The assessee further referring to section 23 of the Act explained that the amount of actual rent received or receivable by the assessee will not include the amount of rent which the assessee cannot realize, therefore, the same cannot be considered for determining the annual value of the property. The assessee also pointed out that the ITAT in revenue's appeal in Para 6 at page 3 had incorrectly stated that during the year under consideration the entire property was completed against the observation of the learned AO in the original assessment proceedings that only 2nd floor of parki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations of the learned AO in the original assessment order, provisions of law and various case laws such as (i) Parkar Industries (P ) Ltd. Vs ITO (2008) 25 SOT 406 (Mum.), (ii) Smt. Poonam Sawhney Vs AO (2008), 20 SOT 68, (iii) CIT Vs Wellworth Agencies (P) Ltd. (2007) 164 Taxman 398 (Delhi) and (iv) Delite Enterprises (P) Ltd. Vs ITO (2008) 22 SOT 245 (Mum.), deleted the addition by observing as under: "Keeping in view the foregoing discussion and respectfully following the ratio laid down by various courts of law, I am inclined to agree with the arguments of the learned A. R. that the building in question though complete structurally was incomplete in respect of 2nd to 9th floor in absence of basic amenities so as to make it compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. (2) Premshree Gems Pvt. Ltd. Vs ACIT wherein it was held that the notional rent need not be considered for arriving at the ALV of the property if the property was intended to be let out, however, despite effort taken for letting out, remained vacant. The gist of the order of the Tribunal is reproduced herein below: "Section 23(1) of the Income-tax Act, 1961, which deals with determination of the annual letting value of property, was substituted by a new provision with effect from April 1, 2002, by the Finance Act, 2001. The amended section contains here clauses dealing with different situations to compute the annual value of any property. These three clauses are independent clauses and deal with three types of situations. Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also not correct, because the tense of the verb used prior to the word "let" is the present tense and this means that the provisions of the clause refer to the relevant previous year and not of any earlier period. Moreover, if this interpretation is accepted, the provisions of clause ( c ) cannot be made applicable in the first year, when the property is acquired and remained vacant because it could not be let out for want of tenant and there is no earlier period in that case prior to the start of the relevant previous year. Moreover, if a property was let out in one year for any period, which can be even one month, such property will enjoy benefit of clause ( c ) for any number of years after that, if the property remains vacant even if it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent to the resolutions, the assessee approached various estate and finance consultants for letting the properties but unfortunately during the year under appeal, the assessee could not get a suitable tenant. Since the property was held to be let, its annual letting value could only be worked out under sub-clause ( c ) of section 23(1) of the Act and according to this clause, the rent received or receivable during the year was nil and that had to be taken as the annual value of the property in order to compute the income from house property." 7. Considering the facts of the case before us and the decision of the Tribunal cited supra, it is apparent that the decision rendered by the learned CIT(A) need not be interfered with even if there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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