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TMI Blog2022 (12) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, the same were lying vacant for the entire year under consideration, despite efforts being made by the assessee. The provisions of section 23(1)(a) of the Act can be invoked in the event the properties are lying vacant all throughout and have not been let out either in the prior or succeeding assessment years and also the assessee has made no effort to let out the same. Notably the words used in section 23(1)(c) of the Act are the property is let and was vacant during the whole of the year , which necessarily implies that the same property cannot be let out and yet remain vacant during the same assessment year. Therefore, as noted above, the reasonable construction/interpretation of section 23(1)(c) would be that if the property has been let out in any of the previous years, but the same could not be let out despite the best efforts by the assessee, the assessee would be entitled to avail the benefits of section 23(1)(c) of the Act. Accordingly, in our considered view, the Ld. CIT(Appeals) has not erred in facts and in law in allowing the assessee s appeal on this issue. Disallowance of Interest Expenditure - AO observed that in respect of amounts taken from indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, the Ld.CIT(A) has erred in deleting the addition made on account of Annual Lettable Value (ALV) as income from House Property of Rs. 63,37,765/-. 2. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition made on account of disallowance of interest expenditure of Rs.99,21,084/-. 3. It is, therefore, prayed that the order of the Ld.CIT(A) may be set-aside and that of Assessing Officer may be restored to the above extent. 4. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal. ITA No. 1461/Ahd/2018 A.Y. 2014-15 1. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition made on account of Annual Lettable Value (ALV) as income from House Property of Rs.69,52,499/-. 2. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition made on account of disallowance of interest expenditure of Rs.86,78,028/-. 3. It is, therefore, prayed that the order of the Ld.CIT(A) may be set-aside and that of Assessing Officer m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from year to year is to be considered. As the actual rent received is NIL, the ALV of the same has to be taken as NIL as envisaged u/s 23(l)(c) of the Act. Therefore the A.O. is direct to consider the A.L.V at NIL in respect of each such property which has remained vacant and to delete addition of Rs.63,37,765/-. The appeal succeeds on this ground. 6. The Department is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals) deleting the ALV computed by the Ld. Assessing Officer. The Ld. DR submitted that Ld. CIT(Appeals) has not gone into the facts of the case while allowing assessee s appeal. The Ld. CIT(Appeals) simply accepted the assessee s contention and the judicial precedents placed before him and has not gone into the details of each of the individual properties and has not ascertained separately as to the reasons why the same were lying vacant. The Ld. DR placed reliance on decisions of Vivek Jain 14 taxmann.com 146 (Andhra Pradesh), wherein the High Court held that where property has not been let out at all during the previous year under consideration, there is no question of any vacancy allowance being provided under section 23(1)(c) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 : 8.1 In the case of Asfa Technologies BPO (P.) Ltd.[2022] 143 taxmann.com 170 (Chennai - Trib.), the ITAT has held that if property is let out for two or more years and was vacant for whole or any part of previous year, then said property would come within ambit of provisions of section 23(1)(c).The ITAT further held that where property owned by assessee was let right from assessment years 2008-09 to 2011-12, however, same was vacant due to non-availability of tenants for impugned assessment year alone, Assessing Officer had erred in computing annual value of property in terms of section 23(1)(a) and, thus, he was to be directed to delete addition made towards income from house property. While passing the order, the ITAT held as below: ■ As per provisions of section 23(1), for the purpose of section 22, annual value of any property shall be deemed to be sum for which property might reasonably be expected to let from year-to-year and where property or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned assessment year alone. Further, the assessee has made his best efforts to let out the property which is evident from e-mail correspondence between the assessee and agents however, could not get tenants for relevant period. Therefore, the assessee has rightly computed annual letting value of the property as per provisions of section 23(1)(c). The term 'property is let' used in section 23(1)(c) is solely used with intent to avoid misuse of determination of annual value of self-occupied property by taking recourse to section 23(1)(c), however, same cannot be stretched beyond that and thus, annual value of property which was let, but thereafter remains vacant for whole year under consideration, subject to condition that same is not put under self-occupation of the assessee and is held for the purpose of letting out of the same would continue to be determined under section 23(1)(c). 8.2 In the case of Metaoxide (P.) Ltd.[2018] 92 taxmann.com 302 (Mumbai - Trib.), the ITAT held that in order to avail benefit of clause (c) of section 23(1), it is not necessary that property should have been actually let out in relevant previous year or during any time prior to rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o section 23(1)(c), however, same cannot be stretched beyond that and, thus, 'annual value' of a property which is let, but thereafter remains vacant for whole year under consideration, subject to condition that same is not put under selfoccupation of assessee and is held for purpose of letting out of same, would continue to be determined under section 23(1)(c). 8.7 In the case of Kamal Kumar[2022] 140 taxmann.com 106 (Delhi - Trib.), the ITAT held that where commercial property of assessee remained vacant during whole of previous year due to facts that property was unauthorized property and Government was having a sealing drive on unauthorized property, provisions of section 23(1)(c) would not be applicable and tax authorities below had thus fallen in error in taxing assessee on basis of notional rent. 8.8 Now coming to the instant facts, we observe that the counsel for the assessee has submitted that the properties under question were let out in earlier years, but due to reasons beyond the control of the assessee, the same could not be let out during the year under consideration. The counsel for the assessee placed on record various documents in support of the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan, has given interest payment of 26,14,218/- towards M/s Klasse consultants and 120,000/- paid to Vinubhai Shah (HUF). Accordingly, the AO held that since the assessee has failed to establish clear nexus between the interest expenditure of 99,21,084/- (comprising of 71,86, 866/- + 26,14,218/- + 120,000/-), the same is being disallowed and added back to the total income of the assessee. 11. In appeal, Ld. CIT(Appeals) allowed the assessee s appeal with the following observations: 8.4 The Ld. AR has relied upon his submission of A.Y. 2010-11 against the assessment u/s 153C r.w.s. 143(3), wherein the Ld: AR has submitted that the appellant had incurred interest expense towards loans taken and same were extended to other parties on which interest income has been earned that interest income earned during the year and offered to tax u/s 56 of the Act is Rs.1,06,06,189/- as against interest expense of Rs.93,97,212/- that interest expense that is claimed as expenditure u/s 57 of the Act while computing income from other sources. It is also submitted that CIT(A)-5 Baroda vide order dated 05/10/2016 in the appellant's own case for A.Y. 2012-13 [against earlier assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al/applicable to the facts of the present year i.e. no enquiry/ discussion is done with respect to parties from whom the interest bearing loan was taken and to which parties, the loan was given on interest to earn interest income. Further, Ld. CIT(Appeals) has not controverted the specific findings made by the Ld. Assessing Officer in the assessment order under consideration. In view of the above facts, in the interest of justice, we are restoring the file to Ld. CIT(Appeals) so as to conduct an acceptable enquiry into the nexus between the interest-bearing loans and how the same were utilised to earn interest income, so as to examine the eligibility of claim made by the assessee. In the result, the file is being restored to the Ld. CIT(Appeals) with the above directions. 15. In the result, Ground No.2 of the Department s appeal is allowed for statistical purposes. 16. Grounds numbers 3 and 4 of Department s appeal for assessment year 2013-14 are general in nature and do not require any specific adjudication. 17. In the result, the appeal of the Department for A.Y. 2013-14 is partly allowed for statistical purposes. Assessment year 2014-15 : 18. Since the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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