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TMI Blog1982 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... lats were occupied by the assessee, who was an individual, from April, 1972, after its final completion. The assessee claimed deduction under s. 23(1), second prov., cl. (b) of the said Act in respect of six residential units let out and also for the third floor occupied by the assessee for his dwelling. It was submitted before the ITO that the deduction under s. 23(1), second prov., cl. (b) of the said Act is allowable to buildings, erection of which was begun after the 1st April, 1961, and completed after the 31st Match, 1970, and as the construction of the house property of the assessee was completed in the financial year 1971-72, the assessee was entitled to deduction tinder s. 23(1), second prov., cl. (b) of the said Act in the assessment year 1973-74. Before the ITO the assessee laid stress on the completion of the building as a whole but the ITO held that this contention was not tenable. The ITO held that the deduction under this section was allowable for each of the residential units of the building if it was let out. The ITO took the view that the applicability of the section came into force as soon as the residential unit was completed and let out. He also held that the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the occupation of the assessee. There was a further appeal before the Tribunal and the only ground, which was presented before the Tribunal, was to the effect that the construction of the whole building was completed after 31st March, 1970, and so the completion of the construction of some individual residential units comprising of the buildings earlier should not and could not be considered in considering the claim under the second prov. to cl. (b) of s. 23(1) of the said Act. It was also pleaded before the Tribunal that if two interpretations were possible of the second prov. to cl. (b), then one, which was in favour of the assessee, should have been applied. The Tribunal considered the rival contentions, set out the relevant facts and observed as follows : " 12. We find that section 23(1), second proviso, cl (b) lays down that in the case of a building comprising one or more residential units , the erection of which is begun after the first day of April, 1970, the deduction is allowable for a period of three years from the date of the completion of the building, Proviso (a), clauses (i) and (ii) refer to the residential unit. The Incometax Officer and the Appellate Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and the Income-tax Officer were correct in holding that the assessee is not entitled to claim any deduction for any of the three floors under section 23(i), second proviso, cl. (b) of the said Act. We, therefore, uphold the order of the Appellate Assistant Commissioner and the assessment order of the Income-tax Officer. " In order to appreciate the contention it is necessary to determine the actual provisions of the relevant section. We must mention that this section has undergone from time to time certain amendments. In order to get the full meaning of the provisions of that section it is necessary to set out the section in extenso: " 23. (1) For the purposes of section 22, the annual value of any property shall be deemed to be the sum for which the property might reasonably be expected to let from year to, year : Provided that where the property is in the occupation of a tenant, the taxes levied by any local authority in respect of the property shall, to the extent such taxes are borne by the owner, be deducted in determining the annual value of the property : Provided further that the annual value as determined under this sub-section shall. (a) in the case of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purposes of his own residence, nothing contained in that proviso shall apply in computing the annual value of that residential unit. Explanation 2.-Where any such property as is referred to in this sub-section consists of more than two houses, the annual value of the houses other than those the annual value of which is required to be determined under this sub-section shall be determined under sub-section (1) is if such houses had been let. (3) Where the property referred to in sub-section (2) consists of one residential house only and it cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in building not belonging to him, the annual value of such house shall (a) if the house was not actually occupied by the owner during the whole of the previous year, be taken to be nil, or (b) if the house was actually occupied by the owner for a fraction of the previous year, be taken to be that fraction of the annual value determined under sub-section (2) Provided that the following conditions are in either case fulfilled (i) the house is not act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been allowed if we go by the second proviso to s. 23(1), which we have set out hereinbefore. But we must bear in mind the first Explanation to sub-s. (2) of s. 23 , and construe that provision along with the provisions of sub-s. (1). The Expln. 1 makes it clear that where such residential unit, as referred to in the second proviso to sub-s. (1) is in the occupation of the owner, which is a residential unit in which the owner is staying, I comes within the mischief of this provision, then it clearly stipulated that nothing contained in the proviso to this section shall apply to the computation of the annual (value of the) residential unit. It appears to us that the whole scheme is to pay the annual value of the building (sic). But for that, the computation of the annual value of the residential units is necessary in order to measure the relief to be granted to the assessee. In case any residential unit comes within the mischief of Expln. 1 to sub-s (2) of s. 23 then, to the extent the annual value of that residential unit comes within the mischief of Expln. 1 it has to be eliminated and the assessee is not entitled to get any relief. Therefore, in so far as the Tribunal held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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