S.M. Chandrashekar, Bangalore V. ITO, Bangalore

ITA 1060/BANG/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9415 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 24-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K SHANKAR PRA SAD
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Notional interest; Onus to prove; Reason to believe
• Section: 50C; 56(2); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE SHRI VIJAY PAL RAO , JUDICIAL MEMBER I.T.A. NO. 1060 /BANG/201 6 (ASSESSMENT YEAR : 200 8 - 09 ) MR. S M CHANDRASHEKAR , SCM SILK CORPORATION, NO.4, SIDDHANNA LANE, J M ROAD CROSS, BANGALORE - 560 0 02 PAN AAYPC 4023H VS. INCOME TAX OFFICER , WARD 1( 4 ), BANGALORE. APPELLANT RESPONDENT. APPELLANT BY : SHRI S. RAMASUBRAMANIAN, C.A. RESPONDENT BY : DR.K. SHANKAR PRASAD, JCIT (D.R) DATE OF H EARING : 17.08.2016. DATE OF P RONOUNC EMENT : 31. 8. 201 6 . O R D E R PER SHRI VIJAY P AL RAO, J. M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DT.14.3.2016 OF COMMISSIONER OF INCOME TAX (APPEALS) - 5, BANGALORE FOR THE ASSES SMENT YEAR 2008 - 09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : I. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN SO FAR IT IS PREJUDICIAL TO THE INTERESTS OF THE APPELLANT IS BAD AND ERRONEOUS IN LAW AND AGA INST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO. 1060 /BANG/ 2016 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE APPELLANT HAD LET OUT THE PROPERTY AT LANGFORD ROAD AND THE FINDING OF THE LEARNED LOWER AUTHORITIES THAT THE PROPERTY HAS BEEN LET OUT IS PERVERSE AS NOT BEING SUPPORTED BY ANY EVIDENCE ON RECORD. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN HOLDING - THAT THE APPELLANT H AD LET OUT THE PROPERTY WITHOUT BRINGING ON RECORD EVEN THE NAME OF THE TENANT TO WHOM THE PROPERTY IS LET OUT AND THE ADDITION HAS BEEN MADE MERELY ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS. 4. THAT THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAD BEEN RENOVATING THE PROPERTY DURING THE FINANCIAL YEAR 2006 - 07 AND COULD NOT HAVE LET OUT THE PROPERTY. 5. THAT THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT THE ANNUAL LETTING VALUE OF HOUSE PROPERTY AT LANGFORD ROAD SHOULD BE DETERMINED AT NIL U/S. 23(1)(C)OF THE ACT. 6. THAT THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) THAT THE APPELLANT HAD LET OUT THE PROPERTY SITUATED AT AIRPORT ROAD IS PERVERSE AS IT IS NOT SUPPORTED BY ANY MATERIALS ON RECORD. 7. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN HOLD ING THAT THE APPELLANT HAD LET OUT THE PROPERTY WITHOUT BRINGING ON RECORD EVEN THE NAME OF THE TENANT TO WHOM THE PROPERTY IS LET OUT AND THE ADDITION HAS BEEN MADE MERELY ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS. 8. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE HELD THAT THE ANNUAL LETTING VALUE OF THE HOUSE PROPERTY AT AIRPORT ROAD IS NIL U/S 23(1)(C) OF THE ACT. 9. THAT THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE VALUE OF JAYANAGAR PROPERTY IS UNEXPLAINED EVEN THOUGH THE APPELLANT HAD ACCOUNTED THE VALUE OF THE SITE IN ITS BOOKS OF ACCOUNT. 10. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN SUSTAINSAG THE ADDITION OF RS. 7,52,698 BEING THE DIFFERENCE BETWEEN THE GUIDANCE VALUE MENTIONED IN THE SALE DEED AND THE ACTUAL AMOUNT IGNORING THE FACT THAT THE VALUE MENTIONED IN SECTION 50C CANNOT BE APPLIED IN THE HANDS OF THE PURCHASER. 11. THAT THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THAT THE APPELLANT HAD RECEIVED ADVANCES FROM TENANTS IS PERVERSE IN LAW AS NOT BEING SUPPORTED BY ANY MATERIALS IN RECORD. 3 ITA NO. 1060 /BANG/ 2016 12. THAT THE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THAT THE APPELLANT HAD EARNED INTEREST OF RS. 39.600 BY INVESTING THE ADVANCES RECEIVED FROM THE TENANT IS PERVERSE IN LAW AS NOT BEING SUPPORTED BY ANY MATERIAL OR RECORD AND THE ADDITION IS MERELY BASED ON MERE ASSUMPTIONS AND PRESUMPTIONS. EACH OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE TO ONE ANOTHER AND THE APPELLANT CRAVES LEAVE OF THE HON'BLE ITAT, BANGA LORE TO ADD, DELETE, AMEND OR OTHERWISE MODIFY ONE OR MORE OF THE ABOVE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 3. THE ASSESSEE IS AN INDIVIDUAL AND FILED ITS RETURN OF INCOME ON 29.07 .20 08 DECLARING A TOTAL INCOME OF RS.3,22 ,313. DURING THE SCRUTINY ASSESSMENT THE ASSESSING OFFICER NOTED THAT AS PER THE BALANCE SHEET THE IMMOVABLE PROPERTY SHOWN BY THE ASSESSEE ARE AS UNDER : AS PER THE SCHEDULE ENCLOSED, THE BREAK UP IS : SITE ACCOUNT : RS.4,59,922. PROPERT Y AT LANGFORD ROAD : RS.4,01,145. PROPERTY AT LANGFORD ROAD : RS.4,06,939. PROPERTY AT AIRPORT ROAD : RS.15,61,125. THE ASSESSEE PURCHASED TWO PROPERTIES AT LANGFORD ROAD DURING THE F.Y. 2006 - 07. THE ASSESSEE FURNISHED LEASE DEED OF ONE OF THE PROPERTIES WHEREIN THE APARTMENT WAS LET OUT FOR RS.7,000 P.M. + RS.400 P.M. TOWARDS MAINTENANCE AND TOTAL AMOUNTING TO RS.7,400 P.M. THE LEASE AGREEMENT PERTAINS TO F.Y. 2008 - 09. HOWEVER THE APARTMENT/FLAT WAS PURCHASED DURING THE ASSESSMENT YEAR 2007 - 08. THE ASSESSING OFFICER PROPOSED TO ASSESS THE ANNUAL LETTING VALUE 4 ITA NO. 1060 /BANG/ 2016 OF THE FLAT FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT FLATS WERE VACANT AND THEREFORE EVEN IF ANNUAL LETTING VALUE (ALV) HAS TO BE A SSESSED, THE VACANCY ALLOWANCE SHOULD BE ALLOW ED. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND ASSESSED THE ALP @ RS.7,400 P.M. FURTHER THE ASSESSING OFFICER HAS ALSO PROCEEDED TO ASSESS THE DEEMED ADVANCE RECEIVED FROM LETTIN G OUT OF THE PROPERTY. THE ASSESSING OFFICER NOTED THAT THE LEASE AGREEMENT FOR THE ASSESSMENT YEAR 2009 - 10 SHOWS THAT THE ASSESSEE RECEIVED RENTAL ADVANCE FOR THESE LETTING OUT PROPERTIES BASED ON WHICH THE ASSESSING OFFICER ESTIMATED THE DEEMED ADVANCE FOR THREE PROPERTIES OF RS.1,20,000, RS.1,20,000 AND RS.90,000 RESPECTIVELY TOTAL AMOUNTING TO RS.3,30,000. ACCORDINGLY, THE ASSESSING OFFICER HAS APPLIED THE INTEREST RATE OF 12% P.A. ON THE MONEY DEEMED DEPOSITED AND BRING TO TAX RS.39,300 AS INCOME F ROM OTHER SOURCES. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE CIT (APPEALS). THE CIT (APPEALS) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. 4. BEFORE TRIBUNAL , THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSE SSEE HAS SUBMITTED THAT WHEN THE PROPERTIES WERE LET OUT IN THE SUBSEQUENT YEAR AND THE ASSESSEE HAS NOT DELIBERATELY KEPT THE PROPERTIES VACANT THEN THE 5 ITA NO. 1060 /BANG/ 2016 VACANCY ALLOWANCE UNDER SECTION 23(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') IS AVAILAB LE IN THIS CASE OF THE ASSESSEE. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE C ASE OF SMT. SHAKUNTALA DEVI VS. DCIT DT.20/ 12/ 2011 IN ITA NO.1524/BANG/2010. 5. ON THE OTHER HAND, THE LEA RNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE VACANCY ALLOWANCE UNDER SECTION 23(1)(C) OF THE ACT IS AVAILABLE ONLY WHEN THE HOUSE PROPERTY IS ALREADY LET OUT AND IT REMAIN VACANT DURING THE YEAR UNDER CONSIDERATION. THUS THE LEARNED DEPARTMENTA L REPRESENTATIVE HAS SUBMITTED THAT WHEN THE PROPERTY WAS NOT AT ALL LET OUT BY THE ASSESSEE THEN THE PROVISIONS OF SECTION 23(1)(C) OF THE ACT ARE NOT APPLICABLE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT AS PER SECTION 2 3(4) OF THE ACT IF THE PROPERTY REFERRED TO IN SUB - SECTION 2 CONSISTS OF MORE THAN ONE HOUSE THE PROVISIONS OF THIS SUB - SECTION SHALL APPLY ONLY IN RESPECT OF SUCH ONE HOUSE WHICH THE ASSESSEE AT HIS OPTION SPECIFY IN THIS BELIEF. THE ALV OF THE HOUSE NOT SELF OCCUPIED SHALL BE DETERMINED AS PER PROVISIONS OF SUB - SECTION (1) OF SECTION 23 OF THE ACT. THEREFORE, THE HOUSE IN QUESTION IS NOT A SELF - OCCUPIED HOUSE AND THEREFORE 6 ITA NO. 1060 /BANG/ 2016 ANNUAL VALUE OF THE HOUSE SHALL BE DEEMED TO BE THE SUM FOR WHICH IT MIGHT REASO NABLY EXPECT TO LET OUT FROM YEAR TO YEAR. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIA L ON RECORD. THE ASSESSING OFFICER HAS ASSESSED THE ANNUAL VALUE OF THE HOUSE IN QUESTION BY APPLYING THE DEEMING PROVISIONS OF SE CTION 23(4) OF THE ACT THAT IF THE HOUSE IS NOT SELF - OCCUPIED THEN IT SHALL BE DEEMED TO BE THE SUM FOR WHICH THE PROPERTY EXPECTED TO FETCH THE RENT FROM YEAR TO YEAR. THE ASSESSING OFFICER HAS PROCEEDED ON THE PRESUMPTION THAT THE HOUSE WAS LET OUT IN T HE YEAR UNDER CONSIDERATION . SINCE IT WAS PURCHASED IN THE EARLIER YEAR , T HEREFORE , DURING THE YEAR THERE WAS NO REASON TO BELIEVE THAT THE HOUSE WAS NOT LET OUT . W HEREAS THE ASSESSEE HAS PRODUCED THE LEASE RENT WHEREBY THE HOUSE WAS LET OUT FROM NEXT Y EAR. WHEN THE ASSESSEE HAS EXPLAINED THE REASON THAT THE HOUSE WAS UNDER RENOVATION AND THEREFORE , IT COULD NOT BE LET OUT DURING THE YEAR UNDER CONSIDERATION. FURTHER IT WAS NOT INTENTIONALLY KEPT VACANT BY THE ASSESSEE. THE VACANCY OF THE HOUSE WAS BE YOND THE CONTROL OF THE ASSESSEE AND THEREFORE THE BENEFIT OF VACANCY IS AVAILABLE TO THE ASSESSEE AS PER THE PROVISIONS OF SECTION 23(1)(C) OF THE ACT. IT IS PE R TINENT TO NOTE THAT EVEN OTHERWISE IT MAY NOT BE ALWAYS POSSIBLE TO LET OUT THE PROPERTY JUS T AFTER ITS 7 ITA NO. 1060 /BANG/ 2016 ACQUISITION OR ITS READINESS TO BE OCCUPIED. THE PROCESS OF LETTING OUT MAY TAKE SOME TIME IN SEARCHING THE SUITABLE TENANT AND FOR SETTLING THE TERMS AND CONDITIONS OF THE LETTING OUT. THEREFORE EVEN IF IT IS PRESUMED THAT THE HOUSE WAS READ Y FOR OCCUPATION IF IT IS NOT INTENTIONALLY KEPT VACANT BY THE ASSESSEE THEN IT CANNOT BE PRESUMED THAT THE ASSESSEE HAS DELIBERATELY NOT LET OUT THE HOUSE DURING THE YEAR UNDER CONSIDERATION. THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SHAKUNT ALA DEVI (SUPRA) HAS CONSIDERED AN IDENTICAL ISSUE IN PARA 8 AS UNDER : 8. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE PROPERTIES I N QUESTION WERE EARLIER LET OUT BUT REMAINED VACANT AND COULD NOT BE LET OUT FOR THE YEAR UNDER CONSIDERATION SINCE THOSE WERE INHABITABLE. A SIMILAR ISSUE HAS BEEN ADJUDICATED BY THE ITAT, LUCKNOW BENCH B IN THE CASE OF SMT. INDU CHANDRA VS. DCIT (SUPRA ). IN THE SAID CASE, ONE OF US (AM) IS THE SIGNATORY. IN THE CASE OF SMT. INDU CHANDRA (SUPRA), ADDITION WHICH WAS MADE IN SIMILAR CIRCUMSTANCES, WAS DELETED BY FOLLOWING THE DECISION OF THE ITAT, MUMBAI BENCH C IN THE CASE OF PREMSUDHA EXPORTS (P) LTD. VS. ACIT (2008) 110 ITD 158 (MUM) AND THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 11 AND 11.1 OF THE ORDER DATED 29.4.2011 WHICH ARE REPRODUCED AS UNDER : 11. AFTER' CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIAL ON RECORD, IT IS NO TICED THAT THE PROPERTY IN QUESTION REMAINED VACANT AND CLAIM OF THE ASSESSEE WAS THAT SHE MADE ALL THE EFFORTS TO LET OUT THE PROPERTY, BUT THE SAME COULD NOT BE LET OUT BECAUSE THE PROPERTY WAS SITUATED AT 5 TH FLOOR AND THE LIFT WAS NOT WORKING. ON A SI MILAR ISSUE, THE I.T.A.T. MUMBAI BENCH 'C' IN THE CASE OF PREMSUDHA EXPORTS (P) LTD. VS. ACIT, CC 10, MUMBAI (SUPRA), HAS HELD AS UNDER: 'IT WAS THE CASE OF THE REVENUE THAT CLAUSE (C) OF SECTION 23 (1) CAN ONLY BE INVOKED IN THOSE CASES WHERE THE PROPERTY WAS LET OUT IN EARLIER YEARS OR IN THE PRESENT YEAR. THE ASSESSEE, ON THE OTHER HAND, CONTENDED THAT THE INTENTION OF LETTING OUT THE PROPERTY WAS TO BE SEEN FOR INVOKING CLAUSE (C) OF SECTION 23 (1) FOR COMPUTING THE ANNUAL LETTING VALUE OF THE PROPERTY AND IT WAS IRRELEVANT WHETHER THE PROPERTY IS/WAS LET OUT. [PARA II] THEREFORE, 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 REVEN UE 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 SIT UATIONS 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 8 ITA NO. 1060 /BANG/ 2016 WHOLE OF THE SAME YEAR. [PARA 12] THE SECOND INTERPRETATION SUGGESTED BY THE REVENUE WAS THAT THE PROPERTY SHOULD BE ACTUALLY LET OUT DURING ANY TIME PRIOR TO THE RELEVANT PREVIOUS YEAR AND THEN ONLY, IT COULD BE SAID. THAT THE PROPERTY IS LET OUT AND CLAUSE (C) WOULD BE APPLICABLE. THE TENSE OF THE VERB USED PRIOR TO THE WORD 'LET' IS PRESENT TENSE A ND NOT PAST TENSE. IT MEANS THAT THE PROVISIONS OF CLAUSE (C) TALK REGARDING THE RELEVANT PREVIOUS YEAR AND NOT OF ANY EARLIER PERIOD AND IF THAT BE SO, THE CONTENTION OF THE REVENUE WAS NOT ACCEPTABLE. [PARA 13] NOW THE QUESTION AROSE AS TO WHAT WOULD BE THE CORRECT AND WORKABLE INTERPRETATION OF THE WORDS 'PROPERTY IS LET' IN CLAUSE (C) OF SECTION 23 (1). FOR THIS, IT IS TO BE DETERMINED AS TO WHETHER ACTUAL LETTING OUT IS A MUST FOR A PROPERTY TO FALL WITHIN THE PURVIEW OF CLAUSE (C) OF SECTION 23(1). [ PARA 15] FROM A READING OF THE PROVISIONS OF SUB - SECTION (3) OF SECTION 23, IT APPEARS THAT THE LEGISLATURES IN THEIR WISDOM HAVE USED THE WORDS 'HOUSE IS ACTUALLY LET'. THIS SHOWS THAT THE WORDS 'PROPERTY IS LET' CANNOT MEAN ACTUAL LETTING OUT OF THE PROP ERTY BECAUSE HAD IT BEEN SO, THERE WAS BE NO NEED TO USE THE WORD 'ACTUALLY' IN SUBSECTION (3) OF SECTION 23. REGARDING THE SCOPE OF REFERRING TO ACTUAL LETTING OUT IN PRECEDING PERIOD, THERE WAS NO FORCE IN THE CONTENTION OF THE REVENUE, AS THE LEGISLATUR E HAS USED THE PRESENT TENSE. EVEN IF IT IS INTERPRETED SO, IT MAY LEAD TO UNDESIRABLE RESULT BECAUSE IN SOME CASES, IF THE OWNER HAS LET OUT A PROPERTY FOR ONE MONTH OR FOR EVEN ONE DAY, THAT PROPERTY WOULD ACQUIRE THE STATUS OF 'LET OUT PROPERTY' FOR 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. THEREFOR E, 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 AND EFFORTS ARE MADE TO LET IT OUT, THAT PROPERTY IS COVERED BY CLAUSE (C) AND THIS REQUIREMENT HAS TO BE SATISFIED IN EACH YEAR THAT THE PROPERTY WAS BEING HELD TO LET OUT BUT REMAINED VACANT FOR WHOLE OR PART OF THE YEAR. ABOVE DISCUSSION SHOWS THAT MEANING AND INTERPRETATION OF THE WORDS 'PROPERTY IS LET' CANNOT BE 'PROPERTY ACTUALLY LET OUT'. THUS, IF A PROPERTY IS HELD WITH AN INTENTION TO LET OUT IN THE RELEVANT YEAR COUPLED WITH EFFORTS MADE FOR LETTING IT OUT, IT COULD BE SAID THAT SUCH A PROPERTY IS A LET OUT PROPERTY AND THE S AME WOULD FALL WITHIN THE PURVIEW OF CLAUSE ( C ) OF SECTION 23(1). [PARA 16] IN THE INSTANT CASE, THE ASSESSEE - COMPANY WAS ENTITLED TO PURCHASE THE PROPERTY FOR ITS LET OUT AND TO EARN RENTAL INCOME. COPY OF RESOLUTION OF BOARD OF DIRECTORS WAS ALSO PLACE D ON RECORD, WHERE FROM IT WAS EVIDENT THAT ONE OF THE DIRECTORS WAS AUTHORIZED TO TAKE NECESSARY STEPS TO LET OUT THE PROPERTY IN QUESTION. THE ASSESSEE HAD ALSO FIXED THE MONTHLY RENT AND THE SECURITY DEPOSITS OF THE PROPERTY. CONSEQUENT TO THE RESOLUTIO N, THE ASSESSEE HAD APPROACHED VARIOUS ESTATE AND FINANCE CONSULTANTS FOR LETTING OUT THE PROPERTY AND THE REQUEST WAS ALSO DULY ACKNOWLEDGED BY THE ESTATE AND FINANCE CONSULTANTS. UNFORTUNATELY, DURING THE YEAR UNDER APPEAL, THE ASSESSEE COULD NOT GET THE SUITABLE TENANT ON ACCOUNT OF HEFTY RENT AND SECURITY DEPOSITS. THUS, DURING THE WHOLE YEAR, THE ASSESSEE MADE CONTINUOUS EFFORTS TO LET OUT THE PROPERTY AND UNDER THESE CIRCUMSTANCES, THIS PROPERTY COULD BE CALLED TO BE LET OUT PROPERTY IN TERMS OF OBSE RVATIONS 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 YEA R 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] ' 11.1 IN OUR OPINION THE AFORESAID REFERRED TO CASE IS ON THE SAME FACTS, SO RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH IN THE CASE OF PREMSUDHA EXPORTS (P.) LTD. VS. ACIT, C.C. - I0,MUMBAI (SUPRA), WE ARE OF 9 ITA NO. 1060 /BANG/ 2016 THE VIEW THAT SINCE THE RENT RECEIVED OR RECEIVABLE FROM THE PROPERTY IN QUESTION DURING THE YEAR WAS NIL, THE SAME WAS TO BE TAKEN AS THE ANNUAL VALUE O F THE PROPERTY IN ORDER TO COMPUTE THE INCOME FROM HOUSE PROPERTY AS PROVIDED IN SECTION 23(1)(C) OF THE ACT. WE, THEREFORE, SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND THE GROUNDS OF APPEAL NOS.5, 6 & 7 RAISED BY THE ASSESSEE ARE ALLOWED. IN THE PRES ENT CASE, THE FACTS INVOLVED ARE SIMILAR TO THAT OF SMT. INDU CHANDRA (SUPRA). SO, RESPECTFULLY FOLLOWING THE ORDER OF CO - ORDINATE BENCH B OF ITAT, LUCKNOW IN THE AFORESAID REFERRED TO CASE, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) AND THE ADD ITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LEARNED CIT(A) IS DELETED. IN THE CASE ON HAND THE ASSESSEE HAS CLAIMED THAT PRIOR TO THE LEASE AGREEMENT PRODUCED BEFORE THE ASSESSING OFFICER IT WAS NOT POSSIBLE FOR THE ASSESSEE TO LET OUT THE PROPERTY AND THEREFORE IT CLAIMED THE BENEFIT OF VACANCY ALLOWANCE. IN THE ABSENCE OF ANY CONTRARY FINDING THA T THE ASSESSEE HAS DELIBERATELY NOT LET OUT DURING THE YEAR UNDER CONSIDERATION, IT CANNOT BE PRESUMED. THEREFORE PRE - LETTING OUT PERIOD CANNO T BE DEEMED TO BE LET OUT THE PROPERTY. IN ANY CASE, IF THE PROVISIONS OF SECTION 23(1)(C) OF THE ACT ARE TO BE UNDERSTOOD THAT THE VACANCY ALLOWANCE IS AVAILABLE ONLY IN THE CASE WHERE THE PROPERTY IS ALREADY LET OUT AND THERE IS A VACANCY IN BETWEEN THE N THE DEEMING PROVISION OF SECTION 23(4) R.W.S. 23(1) SHALL ALSO BE UNDERSTOOD THAT IN CASE OF VACANCY OF THE PROPERTY IN BETWEEN FROM THE INITIAL LETTING OUT, IT WILL BE DEEMED AS LET OUT . THEREFORE, THESE PROVISIONS CANNOT BE APPLIED WHEN THERE IS A TI ME LAG BETWEEN THE ACQUISITION OF THE PROPERTY AND LETTING OUT OF THE PROPERTY AND THERE IS NO ALLEGATION OF DELIBERATE UNREASONABLE DELAY IN LETTING OUT OF THE PROPERTY. THUS 10 ITA NO. 1060 /BANG/ 2016 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS THE DECISIO N OF THE CO - ORDINATE BENCH (SUPRA), THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED AND THE SAME IS DELETED. 7. THE NEXT ISSUE IS REGARDING ADDITION ON ACCOUNT OF DEEMED ADVANCE. THE ASSESSING OFFICER HAS MADE AN ADDITION OF INCOME AS NOT IONAL INTEREST @ 12% P.A. ON DEEMED ADVANCE RECEIVED FROM THE TENANT. THERE IS NO DISPUTE THAT AS PER THE LEASE AGREEMENT THE ADVANCE WAS RECEIVED BY THE ASSESSEE ONLY IN THE NEXT ASSESSMENT YEAR AT THE TIME OF EXECUTION OF THE LEASE AGREEMENT. THEREFORE THERE IS NO JUSTIFICATION IN MAKING THE ADDITION BY DEEMING THE ADVANCE FROM THE TENANT. THE ASSESSING OFFICER HAS NOT DISPUTED THE FACT THAT THE ADVANCE WAS RECEIVED ONLY AT THE TIME OF LEASE AGREEMENT THEREFORE, THE ADDITION OF NOTIONAL INTEREST IS HI GHLY ARBITRARY ACTION ON THE PAR T OF THE ASSESSING OFFICER AS THERE IS NO ACTUAL BENEFIT RECE IVED BY THE ASSESSEE. HENCE, THE SAID ADDITION MADE BY THE ASSESSING OFFICER IS ABSOLUTELY ILLEGAL AND WITHOUT ANY BASIS AND ACCORDINGLY DELETED. 8. THE NEXT ISSUE IS REGARDING THE ADDITION MADE BY THE ASSESSING OFFICER BY APPLYING THE GUIDING VALUE AS PER SECTION 50 C AS COST OF PURCHASE OF THE PROPERTY. 11 ITA NO. 1060 /BANG/ 2016 9. I HAVE HEARD THE RIVAL SUBMISSIONS AS WELL AS CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE PR OPERTY WAS PURCHASED IN 2004 AND THE SALE DEED WAS REGISTERED ON 28.6.2007. THE ASSESSING OFFICER MADE AN ADDITION ON ACCOUNT OF DIFFERENCE IN THE PURCHASE CONSIDERATION AND STAMP DUTY VALUATION OF THE PROPERTY. THE LEARNED AUTHORISED REPRESENTATIVE HA S RELIED UPON THE DECISION IN THE CASE OF CIT VS. CHANDNI BUCHAR (2010) 323 ITR 510 (P&H) AND SUBMITTED THAT THE DEEMING PROVISION OF SECTION 50C CANNOT BE APPLIED IN THE HAND OF THE PURCHASER. HE HAS FURTHER POINTED OUT THAT AMENDMENT IN SECTION 56(2) (VI) OF THE ACT WAS BROUGHT VIDE FINANCE ACT, 2009 DT.1.4.2010. T HEREFORE , FOR THE YEAR UNDER CONSIDERATION NO ADDITION CAN BE MADE ON ACCOUNT OF DIFFERENCE IN PURCHASE CONSIDERATION PAID BY THE ASSESSEE AND GUIDANCE VALUE OF THE PROPERTY FOR THE PURPO SE OF STAMP DUTY. 10. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 11. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD, IT IS NOTED THAT THE PROVISIONS OF SECTION 50C ARE APPLICABLE ONLY FOR THE PURPOSE OF CAPITAL GAINS. THE SAID PROVISIONS POSTULATE A DEEMED FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF CAPITAL ASSET. 12 ITA NO. 1060 /BANG/ 2016 THEREFORE FOR THE PURPOSE OF COMPUTATION OF CAPITAL GA INS IRRESPECTIVE OF THE ACTUAL CONSIDERATION RECEIVED OR ACCRUING ON TRANSFER OF THE CAPITAL ASSET BEING LAND OR BUILDING OR BOTH THE FULL VALUE CONSIDERATION WILL BE ADOPTED AS THE VALUATION FOR THE PURPOSE OF STAMP DUTY VALUED BY THE STAMP VALUATION AUT HORITY. IN THE CASE ON HAND THE ASSESSEE HAS PURCHASED THE PROPERTY IN QUESTION AND THEREFORE THE PROVISIONS WHICH ARE MEANT FOR COMPUTATION OF CAPITAL GAINS AND DEEMED CONSIDERATION CANNOT BE APPLIED AS IT IS ONLY FOR THE RECEIPT OR ACCRUING AMOUNT IN THE HAND OF THE SELLER AS A RESULT OF CAPITAL ASSET. THEREFORE THE SAID PROVISION CANNOT BE APPLIED IN ASSESSING THE INCOME UNDER SECTION 69 OF THE ACT. IT IS PERTINENT TO NOTE THAT AN AMENDMENT IN THIS REGARD HAS BEEN BROUGHT TO THE PROVISION OF SECTION 5 6(2)(VI) W.E.F. 1.4.2010 THEREFORE , THE SAID PROVISION IS ALSO NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. CHANDNI BUCHAR (SUPRA ) WHILE DEALING AN IDENTICAL ISSUE HAS HELD IN PARAS 2 & 3 AS UNDER : 2. THERE IS CATEGORICAL FINDING RECORDED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) [FOR BREVITY CIT(A) ] HOLDING THAT VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF THE STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF LAND OR BUILDING CANNOT BE TAKEN AS SALE CONSIDERATION RECEIVED FOR THE PURPOSE OF S. 48 OF THE ACT. AS AGAINST THE PURCHASE PRICE DISCLOSED IN THE SALE DEED AT RS. 17,06,700, THE AO HAS ADOPTED THE PURCHASE PRICE OF THE PROPERTY AT RS. 30,32,000, WHICH I S ASSESSED FOR THE PURPOSE OF PAYING THE STAMP DUTY. ACCORDINGLY, IT WAS HELD THAT THE ASSESSEE MUST HAVE PAID RS. 13,25,300 OVER AND ABOVE THE PURCHASE PRICE DISCLOSED IN THE SALE DEED AND THE AO MADE ADDITION OF THIS DIFFERENCE AS INCOME FROM UNEXPLAINED SOURCES. THE CIT(A) 13 ITA NO. 1060 /BANG/ 2016 DELETED THIS ADDITION BY HOLDING THAT S. 50C IS A DEEMING PROVISION FOR THE PURPOSE OF BRINGING TO TAX THE DIFFERENCE AS CAPITAL GAIN. THE CIT(A) FURTHER HELD THAT IN THE ABSENCE OF ANY LEGALLY ACCEPTABLE EVIDENCE, VALUATION DONE FOR T HE PURPOSE OF S. 50C WOULD NOT REPRESENT ACTUAL CONSIDERATION PASSED ON TO THE SELLER. HE PLACED RELIANCE ON THE JUDGMENT OF ALLAHABAD HIGH COURT RENDERED IN THE CASE OF CIT VS. SMT. RAJ KUMARI VIMLA DEVI (2005) 279 ITR 360 (ALL). IN THAT CASE ALLAHABAD HI GH COURT HAS RELIED UPON THE OBSERVATIONS MADE BY HON BLE SUPREME COURT IN THE CASE OF JAWAJEE NAGNATHAM VS. REVENUE DIVISIONAL OFFICER (1994) 4 SCC 595 TO HOLD THAT THE BASIC VALUATION REGISTER PREPARED AND MAINTAINED FOR THE PURPOSE OF COLLECTING STAMP D UTY COULD NOT FORM THE FOUNDATION TO DETERMINE THE MARKET VALUE OF THE ACQUIRED LAND UNDER S. 23 OF THE LAND ACQUISITION ACT, 1894. THE BURDEN OF PROOF IS ALWAYS ON THE CLAIMANT TO PROVE SUCH A FACT AND IN EACH CASE THE PREVAILING MARKET VALUE AS ON THE DA TE OF NOTIFICATION PUBLISHED IN THE STATE GAZETTE UNDER S. 4(1) OF THE ACT HAS TO BE PROVED. THE TRIBUNAL ALSO HELD THAT VALUATION DONE BY ANY STATE AGENCY FOR THE PURPOSE OF STAMP DUTY WOULD NOT IPSO FACTO SUBSTITUTE THE ACTUAL SALE CONSIDERATION AS BEING PASSED ON TO THE SELLER BY THE PURCHASER IN THE ABSENCE OF ANY ADMISSIBLE EVIDENCE. THE AO IS OBLIGED TO BRING ON RECORD POSITIVE EVIDENCE SUPPORTING THE PRICE ASSESSED BY THE STATE GOVERNMENT FOR THE PURPOSE OF STAMP DUTY. THE VIEW OF THE TRIBUNAL IS CLE AR FROM PARA 7 OF THE ITS ORDER, WHICH READS THUS : 'FROM A PLAIN READING OF THIS PROVISION, IT EMERGES OUT THAT THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF LAND OR BUILDING OR BOTH, SHALL FOR THE PURPOSE OF S. 48 BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER. IT NOWHERE PROVIDES THAT THE VALUATION DONE BY THE STATE GOVERNMENT FOR THE PURPOSE OF STAMP DUTY ETC. WOULD IPSO FACTO TAKE PLACE OF THE ACTUAL CONSIDERATION AS BEING PASSED ON TO THE SELLER BY THE PURCHASER IN THE ABSENCE OF ANY OTHER EVIDENCE. THE AO IS REQUIRED TO BRING POSITIVE EVIDENCE ON RECORD INDICATING THE FACT THAT ASSESSEE HAS PAID ANYTHING MORE THAN THE ONE DIS CLOSED IN THE PURCHASE DEED. THE DEPARTMENT HAS TAKEN AN ARGUMENT IN THE GROUNDS OF APPEAL THAT AO SHOULD BE DIRECTED TO MAKE A REFERENCE TO THE VALUATION OFFICER UNDER S. 142A OF THE ACT. IT ALSO RAISED A PLEA THAT AO HAS WRONGLY MADE A REFERENCE OF S. 50 C WHILE MAKING THE ADDITION, IN FACT, THE ADDITION IS MADE UNDER S. 69B ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PROPERTY. WE HAVE TAKEN COGNIZANCE OF BOTH THESE ARGUMENTS. IT IS THE AO WHO HIMSELF OUGHT TO HAVE COLLECTED THE EVIDENCE INDICATING THE FAC T THAT ASSESSEE HAS PAID MORE MONEY THAN THE ONE DISCLOSED IN THE PURCHASE DEED. THE TRIBUNAL WHILE SITTING IN THE SECOND APPEAL IS NOT SUPPOSED TO GIVE DIRECTIONS ON THE APPEAL OF REVENUE THAT A REFERENCE TO THE VALUATION OFFICER IS TO BE MADE IN ORDER TO SUBSTANTIATE THE ADDITION. THE STEPS WHICH AO COULD HAVE TAKEN, IF NOT TAKEN THEN THAT LACUNA CANNOT BE FILLED UP AT THE END OF THE TRIBUNAL. IN THE ABSENCE OF ANY EVIDENCE EXHIBITING THE FACT THAT ASSESSEE HAS MADE UNEXPLAINED INVESTMENT IN THE HOUSE PRO PERTY, NO ADDITION CAN BE JUSTIFIED. LEARNED FIRST APPELLATE AUTHORITY HAS APPRECIATED THE FACTS AND CIRCUMSTANCES IN RIGHT PERSPECTIVE. WE DO NOT FIND ANY ERROR IN THE IMPUGNED ORDER ON THIS GROUND. THUS, THE GROUND OF APPEAL RAISED BY THE REVENUE IS REJE CTED.' 3. HAVING HEARD THE LEARNED COUNSEL, WE ARE OF THE CONSIDERED VIEW THAT THE VIEW TAKEN BY THE TRIBUNAL WHILE ACCEPTING THE ORDER OF THE CIT(A) DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. 14 ITA NO. 1060 /BANG/ 2016 ACCORDINGLY, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CA SE AS WELL AS THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT (SUPRA), THE ADDITION IS NOT JUSTIFIED AND THE SAME IS DELETED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST DAY OF AUG., 201 6 . SD/ - (VIJAY PAL RAO) JUDICIAL MEMBER *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE. BY ORDER ASST. REGISTRAR, ITAT, BANGALORE