Benefit of vacancy allowance was available if assessee made appropriate efforts in letting out property: Delhi ITAT
- a) Assessing Officer (AO) observed that assessee in a statement of affairs had mentioned owning of property. It was further observed that no income from this house property was offered for year under consideration.
- b) Assessee submitted that the property under question was a commercial flat which was purchased way back in 1980 and was let out. The property was continuously let out till assessment year 2001-02 but from assessment year 2002-03, a suitable tenant could not be found and the flat remained vacant. Thus, the property had to be considered as per provisions of section 23(1)(c).
- c) AO made an addition under section 23(1)(A) considering the annual letting value of property to be the sum for which the property might reasonably be expected to be let out year to year.
- d) On appeal, the Commissioner (Appeals) upheld the order passed by AO. Aggrieved-assessee filed the instant appeal before the ITAT.
The ITAT held in favour of assessee as under:
1) In order to attract section 23(1)(c), the following requirements must be fulfilled; (i) the property must be let out; and (ii) it should have been vacant during the whole or any part of the previous year; and (iii) owing to such vacancy the actual rent received or receivable by the owner in respect thereof should be less than the sum referred to in clause.
2) Only if these three conditions are satisfied clause (c) of section 23(1) would apply, in which event amount received or receivable, in terms of clause (c) of section 23(1), shall be deemed to be the annual value of the property.
3) In instant case, admittedly, property in dispute had remained vacant post assessment year 2002-03 till date. It was not the case of revenue that the property after being vacant, remained under self occupation of assessee. It was also not disputed by the revenue that prior to assessment year 2002-03 the property was not let out.
4) Assessee always had the intention of letting out the property. He took appropriate efforts in letting out property but failed to let out same year after year due to fall in property prices, he was entitled to claim benefit under section 23(1)(c). –  101 taxmann.com 45 (Delhi – Trib.)