9911796707
TMI Blog2013 (7) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... in this appeal is with reference to the adoption of annual letting value (ALV) of assessee property. 2. Briefly stated, assessee acquired property on borrowed capital and purchased in the building Times Tower at Kamala Mills Compound, Lower Parel, Mumbai. There is no dispute with the fact that though the property was purchased in May, 2006, the occupancy certificate was issued by BMC in December 2006 and the assessee was in possession of property from January 2007. The assessee claimed NIL annual letting value as the property was vacant and further claimed loss by way of interest of ₹ 86,05,179/-. Assessing Officer after discussing the provisions of the Act and case law, adopted 10% of cost as ALV and determined the ALV for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paper book placed on record along with the copies of relevant case law relied on by parties. The action of Assessing Officer in determining the ALV at 10% of the cost of property cannot be approved as there are catena of decisions that the ALV has to be determined based on the Annual Ratable Value determined by Municipal authorities. The principle was held by Hon'ble Bombay High Court in the case of M.V. Sonavalae vs. CIT (177 ITR 246) long back, which was being followed in number of later decisions. Even for Wealth tax purposes the same decision was relied upon in the case of Smt. Smitaben N. Ambani vs. CWT (323 ITR 104) (Bom.). Therefore, action of Assessing Officer in determining the ALV on the basis of cost of the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the sole dispute, in the instant case, was regarding the interpretation of the words property is let in clause (c) of section 23(1). One interpretation suggested by the revenue was that the property should be actually let out in the relevant previous year. This interpretation was not correct, because as per clause (c) of section 23(1), the property can be vacant during whole of the relevant previous year. Hence, both these situations cannot coexist that the property is actually let out also in the relevant previous year, and that the property in the same year is vacant also during whole of the same year. [Para 12] The second interpretation suggested by the revenue was that the property should be actually let out duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of clause (c) of section 23(1) for the entire life of the property, even without any intention to let it out in the relevant year. Not only that, even if the property was let out at any point of time even by any previous owner, it could be claimed that the property is let out property because the clause talks about the property and not about the present owner and since the property was let out in past, it is a let out property, although the present owner never intended to let out the same. Therefore, it is not at all relevant as to whether the property was let out in past or not. These words do not talk of actual let out also but talk about the intention to let out. If the property is held by the owner for letting out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s property could be called to be let out property in terms of observations made in foregoing paras. Since the property had been held to be let out property, its annual letting value could only be worked out as per clause (c) of section 23(1) and since the rent received or receivable from the said property during the year was nil the same was to be taken as the annual value of the property in order to compute the income from house property. [Para 18] 7. Respectfully following the same, we hold that the assessee is entitled to value property at NIL during the year u/s. 23(1)(c). Therefore, Assessing Officer is directed to accept the ALV at NIL and work out the loss under the head House Property accordingly. 8. In the result, app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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