SONU REALTORS P.LTD, MUMBAI V. DCIT 14(3)(2), MUMBAI

ITA 66/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0212 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 04-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Business income
• Section: 2

Judgement Text

SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 1 A.YS 2011 - 12 & 2012 - 13 IN THE INCOME TAX APPELLATE TRIBUNAL ' C ' BENCH, MUMBAI BEFORE SHRI G. MANJUNATHA , ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 2892 /MUM/201 6 & ITA NO. 66/MUM/2017 (ASSESSMENT YEAR S : 201 1 - 1 2 & 2012 - 13 ) SONU REALTORS PVT. LTD. PLOT NO. 219, LAALASIS, 11 TH ROAD, CHEMBUR, MUMBAI 400 071. VS. DCIT 14(3)(2) MUMBAI PAN AAAC S7073C APPELLANT RESPONDENT APPELLANT BY : SHRI. J.P BAIRAGRA RESPONDENT BY : SHRI RAJAT MITTAL DATE OF HEARING : 05 .0 7 .2018 DATE OF PRONOUNCEMENT : 19 .09.2018 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEALS FILED BY THE ASSESSEE FOR A.Y 2011 - 12 AND A.Y 2012 - 13 ARE DIRECTED AGAINST THE RESPECTIVE ORDERS PASSED BY THE CIT(A) - 22, MUMBAI, DATED 22.01.2016 AND 27.09.2016 . AS A COMMON ISSUE IS INVOLVED IN THE AFOREMENTIONED APPEALS, THUS , THE SAME ARE BEING TAKEN UP AND DISPOSED OFF TOGETHER BY WAY OF A CONSO LIDATE ORDER. WE SHALL FIRST TAKE UP THE APPEAL OF THE ASSESSEE F OR A.Y 2011 - 12. THE ASSESSEE ASSAILING THE ORDER PASSED BY THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, 1. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN COMPUTING THE ANNUAL LETTING VALUE OF THE OFFICE PREMISES AT 81,99,360/ - ALTHOUGH THE SAME OUGHT TO BE TAKEN AS NIL UNDER SECTION 23(1)(C) OF THE ACT. SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 2 A.YS 2011 - 12 & 2012 - 13 2. THE LEARNED ASSESSING OFFICER FURTHER ERRED IN ADOPTING DEEMED RENT RECEIVED OF RS. 81,99,360/ - AS PER LAST YEAR IN RESPECT OF OFFICE PREMISES AT BALAJI BHAVAN WHEN DURING THE PREVIOUS YEAR THE SAID PREMISES WAS LYING VACANT WHILE COMPUTING ANNUAL VALUE. 3. TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER IN CALCULATING PROFIT ON SALE OF TWO OFFICE UNITS UNDER THE HEAD SHORT TERM CAPITAL GAIN AMOUNTING TO RS. 35,32,544/ - AS AGAINST DECLARED BY THE APPELLANT AS BUSINESS INCOME OF RS. 23,92,799/ - . 2. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN CONSTRUCTION BUSINESS HAD FILED ITS RETURN OF INCOME FOR A.Y 20 1 1 - 1 2 ON 25.09.2011 , DECLARING NIL INCOME. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE ACT. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , IT WAS OBSERVED BY THE A.O THAT THE BALANCE SHEET OF THE ASSESSEE REVEALED INVESTMENTS OF RS. 3,54,81,980/ - IN IMMOVABLE PROPERTIES ON 01.04.2010 . ON BEING CALLED UPON TO EXPLAIN THAT AS TO WHY THE DEEMED RENTAL INCOME OF THE AFORESAID PROPERTIES MAY NOT BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE P ROPERTY, THE ASSESSEE OBJECTED TO THE SAME. IT WAS THE CLAIM OF THE ASSESSEE THAT THE UNIT NO. 401 & 425 OF PROJECT BALAJI BHAWAN HAD REMAINED VACANT FOR THE ENTIRE YEAR AS THE LICENSEE VIZ. M/S STERLING CONSTRUCTION SYSTEM PVT. LTD. HAD VACATED THE PRE MISES AND NO RENT, WHATSOEVER, HAD THEREAFTER BEEN RECEIVED. THE A.O FOUND THE AFORESAID CLAIM OF THE ASSESSEE AS FACTUALLY CORRECT. IT WAS OBSERVED BY THE A.O THAT THE ASSESSEE , VIDE AGREEMENT DATED APRIL, 2007 HAD LET OUT UNIT NO. 401 & 425 OF PROJECT BA LAJI BHAVAN TO M/S STERLING CONSTRUCTION P. LTD. FOR A PERIOD OF 36 MONTHS, AND HAD OFFERED THE RENTAL INCOME RECEIVED THEREFROM AS ITS I NCOME FROM HOUSE PROPERTY IN THE PRECEDING YEARS . HOWEVER , IT WA S ALSO NOTICED BY THE A.O , THAT AFTER THE EXPIRY OF THE L ICENSE PERIOD THE LICENSEE HAD VACATED THE PROPERTY A ND CONVEYED ITS INTENTION OF NOT GETTING THE L ICENSE AGREEMENT RENEW ED ANY FURTHER. THE ASSESSEE IN ORDER TO DRIVE HOME ITS CONTENTION THAT THE ANNUAL VALUE OF THE PROPERTY WAS TO BE TAKEN AT NIL, SUBMITTED THAT ITS CASE WAS COVERED BY SEC. 23(1)(C) OF THE ACT. HOWEVER, THE A.O AFTER DELIBERATING ON THE CONTENTIONS ADVANCED BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE SAME. THE A.O WAS OF THE VIEW THAT AS PER SEC. 23(1)(A) SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 3 A.YS 2011 - 12 & 2012 - 13 OF THE ACT, THE SUM FOR W HICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET FROM YEAR TO YEAR WAS TO BE TAKEN AS THE DEEMED ANNUAL VALUE OF THE PROPERTY UNDER SEC. 22 OF THE ACT. FURTHER, THE A.O HELD A CONVICTION THAT THE PROVISIONS OF SEC. 23(1)(C) COULD BE PRESSED INTO SERVICE ONLY WHEN THE PROPERTY IS ACTUALLY LET AND HAD REMAINED VACANT FOR SOME PERIOD DURING THE YEAR . THUS, THE A.O WAS OF THE VIEW THAT AS THE PROPERTY UNDER CONSIDERATION VIZ. UNIT NO. 401 & 425 OF PROJECT BALAJI BHAVAN WERE NOT AT ALL LET OUT DURING W HOLE OF THE YEAR, HENCE THE PROVISIONS OF SEC. 23(1)(C) WOULD NOT BE APPLICABLE TO ITS CASE. ON THE BASIS OF HIS AFORESAID DELIBERATIONS , THE A.O COMPUTED THE ANNUAL VALUE OF THE PROPERTY AS PER SEC. 23(1)(A) AT RS. 81,99,360/ - . 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). T H E CIT(A) AFTER DELIBERATING AT LENGTH ON THE CONTENTIONS ADVANCED BY THE ASSESSEE WAS HOWEVER NOT PERSUADED TO ACCEPT THE SAME AND SUSTAINED THE ORDER OF THE A.O IN CONTEXT OF THE IS SUE UNDER CONSIDERATION. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. AUTHORISED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE , AT THE VERY OUTSET OF THE HEARING OF THE APPEAL SUBMITT ED THAT THE GROUND OF APPEAL NO. 3 WAS NOT BEING PRESSED BY HIM. IN THE BACKDROP OF THE CONCESSION OF THE LD. A.R THE GROUND OF APPEAL NO. 3 IS DISMISSED AS NOT PRESSED. THE LD. A.R TOOK US THROUGH THE FACTS OF THE CASE AND DREW OUR ATTENTION TO THE RELEVA NT OBSERVATIONS OF THE A.O AND THAT OF THE CIT(A) IN CONTEXT OF THE ISSUE UNDER CONSIDERATION. THE LD. A.R TOOK US THROUGH PARA C OF THE LEAVE AND LICENSE AGREEMENT, DATED 22.04.2007 ( PAGE 149 ) OF THE ASSESSE E S PAPER BOOK (FOR SHORT APB). ON A PERUSA L OF THE AFORESAID EXTRACT OF THE AGREEMENT, IT EMERGED THAT THE PROPERTY UNDER CONSIDERATION VIZ. UNIT NO. 401 & 425 OF PROJECT BALAJI BHAVAN WAS GIVEN BY THE ASSESSEE ON LEAVE AND LICENSE BASIS FOR A PERIOD OF 36 MONTHS COMMENCING FROM 10.04.2007, AND TH E SAME THEREAFTER WAS RENEWABLE FOR A FURTHER PERIOD OF 24 MONTHS WITH AN ENHANCE D LICENSE FEES OF 25% . IT WAS SUBMITTED BY THE LD. A.R THAT A PERUSAL OF THE AGREEMENT REVEAL ED THAT THE ASSESSEE HAD INTENDED TO LET OUT THE PROPERTY EVEN FOR THE YEAR UNDER SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 4 A.YS 2011 - 12 & 2012 - 13 CONSIDERATION VIZ. A.Y 2011 - 12. THE LD. A.R SUBMITTED THAT THE LOWER AUTHORITIES HAD MISCONSTRUED OR RATHER MISCONCEIVED THE SCOPE AND GAMUT OF THE PROVISIONS OF SEC. 23(1)(C) OF THE ACT. THE LD. A.R RELYING ON A DECISION OF A COORDINATE BENCH OF THE TRIBU NAL VIZ. ITAT, PUNE BENCH A IN THE CASE OF VIKAS KESHAV GARUD VS. ITO, WARD 1(2), NASHIK (2016) 160 ITD 7 (PUNE) , SUBMITTED THAT SEC. 23(1)(C) CLEARLY CONTEMPLATED A SITUATION WHERE A PROPERTY WAS VACANT DURING THE WHOLE YEAR. THE LD. A.R TAKING SUPPORT OF THE AFORESAID ORDER SUBMITTED THAT THE WORD LET AND VACANT ARE MUTUALLY EXCLUSIVE TERMS , AND A SITUATION CANNOT EXIST WHERE THE PROPERTY IS LET DURING THE YEAR AND IS ALSO SIMULTANEOUSLY VACANT FOR THE WHOLE YEAR. IT WAS THE CONTENTION OF THE LD. A .R THAT THE LOWER AUTHORITIES HAD FAILED TO APPRECIATE THAT THE AFORESAID STATUTORY PROVISION WAS TO BE VIEWED WITH REGARD TO THE INTENTION , TOGETHER WITH THE EFFORTS PUT BY THE ASSESSEE IN LETTING OUT THE PROPERTY , AND THE GROSS ANNUAL VALUE OF THE PROP ERTY WAS TO BE DETERMINED ONLY AFTER CONSIDERING THE SAID FACTORS . THE LD. A.R IN ORDER TO BUTTRESS HIS AFORESAID CONTENTION TOOK SUPPORT OF SUB - SECTION (3) OF SEC. 23 OF THE ACT. IT WAS SUBMITTED BY THE LD. A.R THAT THE USAGE OF THE TERM HOUSE IS ACTUALL Y LET IN SUB - SECTION (3) OF SEC. 23, UNLIKE THE EXPRESSION PROPERTY IS LET USED IN SEC. 23(1)(C), CLEARLY REVEAL ED THAT AS AND WHERE THE LEGISLATURE HAD REQUIRED ACTUAL LETTING OF THE PROPERTY, THERE HAD BEEN A CONSCIOUS, PURPOSIVE AND INTENTIONAL USAGE OF THE TERM ACTUALLY , WHICH HOWEVER WAS ABSENT IN SEC. 23(1)(C). ON THE BASIS OF HIS AFORESAID CONTENTIONS, IT WAS SUBMITTED BY THE LD. A.R THAT THE LOWER AUTHORITIES HAD MISCONSTRUED THE SCOPE OF SEC. 23(1)(C) AND HAD WRONGLY READ THE REQUIREMENT OF AC TUAL LETTING OF THE PROPERTY DURING THE YEAR IN THE SAME . FURTHER, THE LD. A.R IN ORDER TO SUPPORT HIS AFORESAID INTERPRETATION OF SEC. 23(1)(C), RELIED ON THE FOLLOWING ORDERS OF THE COORDINATE BENCHES OF THE TRIBUNAL: (I). PREMSUDHA EXPORTS (P) LTD. V S. ACIT , CENTRAL CIRCLE 10, MUMBAI (2008) 110 ITD 158 (MUM). (II). INFORMED TECHNOLOGIES INDIA LTD. VS. DCIT - 3(2), MUMBAI (2017) 162 ITD 153 (MUM) SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 5 A.YS 2011 - 12 & 2012 - 13 (III). ACIT, CIRCLE - 47(1), NEW DELHI VS. DR. PRABHA SANGHI (2012) 1 39 ITD 504 (DEL) IN THE BACKDROP OF HIS AFORESAID CONTENTIONS, IT WAS SUBMITTED BY THE LD. A.R THAT AS THE CIT(A) HAD ERRED IN CONCLUDING THAT THE PROVISIONS OF SEC. 23(1)(C) WOULD NOT BE APPLICABLE FOR DETERMINING THE ANNUAL VALUE OF THE PROPERTY UNDER CONSIDERATION, THUS , HIS ORDER MAY BE SET ASIDE. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. D.R THAT AS THE PROPERTY UNDER CONSIDERATION VIZ. UNIT NO. 401 & 425 OF PROJECT BALAJI BHAVAN HAD REMAINED VACANT DURING WHOLE OF THE YEAR UNDER CONSIDERATION, THUS , THE LOWER AUTHORITIES HAD RIGHTLY CONCLUDED THAT THE PROVISIONS OF SEC. 23(1)(C) WOULD NOT BE APPLICABLE AND HAD RIGHTLY DETERMINED THE ANNUAL VALUE B Y PRESSING INTO SERVICE SEC. 23(1)(A) OF THE ACT. 7. WE HAVE HEARD THE AUTHORISED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT OUR INDULGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT FOR ADJUDICATING AS TO WHETHER THE ANNUAL VALUE OF THE PROPERTY OWNED BY THE ASSESSEE VIZ. UNIT NO. 401 & 425 OF PROJECT BALAJI BHAVAN , HAD RIGHTLY BEEN DETERMINED BY THE ASSESSEE BY TAKIN G RECOURSE TO SEC. 23(1)(C) OF THE ACT AT RS. NIL , OR THE SAME WAS LIABLE TO BE DETERMINED U/S 23(1)(A) AS HELD BY THE LOWER AUTHORITIES. WE FIND THAT IT IS AN ADMITTED FACT THAT THOUGH THE ASSESSEE HAD VIDE AGREEMENT DATED APRIL, 2007 LET OUT THE UNIT N O. 401 & 425 OF PROJECT BALAJI BHAVAN TO M/S STERLING CONSTRUCTION P VT . LTD. FOR A PERIOD OF 36 MONTHS, AND HAD OFFERED THE RENTAL INCOME RECEIVED THEREFROM AS ITS INCOME FROM HOUSE PROPERTY IN THE PRECEDING YEARS, BUT AFTER THE EXPIRY OF THE LICENSE PER IOD OF 36 MONTHS THE L ICENSE E HAD VACATED THE PROPERTY AND CONVEYED ITS INTENTION OF NOT GETTING THE LICENSE AGREEMENT RENEWED ANY FURTHER. WE FURTHER FIND FROM A PERUSAL OF THE RECORDS BEFORE US THAT IT IS NOT THE CASE OF THE DEPARTMENT THAT AFTER THE PRO PERTY WAS VACATED , THE SAME THEREAFTER HAD REMAINED UNDER THE SELF OCCUPATION OF THE ASSESSEE. I N LIGHT OF THE AFORESAID FACTUAL POSITION IN THE CASE OF THE PRESENT ASSESSEE, SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 6 A.YS 2011 - 12 & 2012 - 13 WE FIND OURSELVES TO BE IN AGREEMENT WITH THE SUBMISSIONS OF THE LD. A.R. THAT TH E ISSUE RAISED BEFORE US IS SQUARELY COVERED BY THE ORDER S OF THE COORDINATE BENCH ES OF THE TRIBUNAL IN THE CASE OF VIZ. (I) . VIKAS KESHAV GARUD VS. ITO, WARD 1(2), NASHIK (2016) 160 ITD 7 (PUNE) (II). ACIT, CIRCLE - 47(1), NEW DELHI VS. DR. PRABHA SANG HI (2012) 139 ITD 504 (DEL); (II I ). PREMSUDHA EXPORTS (P) LTD. VS. ACIT, CENTRAL CIRCLE 10, MUMBAI (2008) 110 ITD 158 (MUM); AND (IV). INFORMED TECHNOLOGIES INDIA LTD. VS. DCIT - 3(2), MUMBAI (2017) 162 ITD 153 (MUM) . WE FIND THAT IN THE CASE OF INFORMED TECHNOLOGIES INDIA LTD. (SUPRA) THE TRIBUNAL AFTER DELIBERATING AT LENGTH ON THE ISSUE AS REGARDS THE SCOPE AND GAMUT OF SEC. 23(1)(C) OF THE ACT, HAD OBSERVED AS UNDER : 7.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF EITHER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD, INCLUDING THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE UNDER CONSIDERATION FOR ADJUDICATION BEFORE US IS AS TO WHETHER THE ALV OF THE PROPERTY OWNED BY THE ASSESSEE IN DARSHAN APARMENTS, MALA BAR HILLS, MUMBAI, HAD RIGHTLY BEEN DETERMINED BY THE ASSESSEE BY TAKING RECOURSE TO SEC. 23(1)(C) OF THE ACT, OR THE SAME WAS LIABLE TO BE DETERMINED U/S 23(1)(A) AS SO HELD BY THE LOWER AUTHORITIES. WE FIND THAT IT IS MATTER OF UNDISPUTED FACT THAT THE PROPERTY OF THE ASSESSEE REMAINED LET OUT UPTO 04.12.2008, AND THEREAFTER THE SAME REMAINED VACANT. WE FURTHER FIND FROM THE PERUSAL OF THE RECORDS BEFORE US THAT IT IS NOT THE CASE OF THE DEPARTMENT THAT AFTER THE PROPERTY WAS VACATED AS ON 04.12.2008, T HE SAME THEREAFTER REMAINED UNDER THE SELF OCCUPATION OF THE ASSESSEE. THAT IN LIGHT OF THE AFORESAID FACTUAL POSITION IN THE CASE OF THE PRESENT ASSESSEE, WE FIND OURSELVES TO BE IN AGREEMENT WITH THE SUBMISSIONS OF THE LD. A.R. THAT THE ISSUE RAISED BEFO RE US FOR ADJUDICATION IS SQUARELY COVERED BY THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF : PREMSUDHA EXPORTS (P) LTD. VS. ACIT (2008) 110 ITD 158 (MUM), WHEREIN THE TRIBUNAL HAD THEREIN HELD : IF THE PROPERTY IS HELD BY THE OWNER F OR LETTING OUT AND EFFORTS WERE MADE TO LET IT OUT , THAT PROPERTY IS COVERED BY THIS CLAUSE 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. WE FEEL THAT T HE WORDS PROPERTY IS LET ARE USED IN THIS CLAUSE TO TAKE OUT THOSE PROPERTIES FROM THE AMBIT OF THE CLAUSE IN WHICH PROPERTIES ARE HELD BY THE OWNER FOR SELF - OCCUPATION I.E SELF OCCUPIED PROPERTY (I.E SOP) BECAUSE EVEN INCOME ON ACCOUNT OF SOP, EXCLUDING ONE SUCH SOP OF WHICH ANNUAL VALUE IS TO BE ADOPTED AT NIL, IS ALSO TO BE COMPUTED UNDER THIS HEAD AS PER CLAUSE (A) OF SECTION 23(1) IF WE SEE THE COMBINED READING OF SUB - SECTION (2) AND (4) OF SECTION 23. ONE THING IS MORE IMPORTANT BECAUSE WE FIND THAT WHERE THE LEGISLATURE HAVE CONSIDERED THAT ACTUAL LETTING OUT IS REQUIRED, THEY HAVE USED THE WORDS HOUSE IS ACTUALLY LET. THIS CAN BE SEEN IN SUB - SECTION (3) OF SAME SECTION 23. BUT IN CLAUSE (C) SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 7 A.YS 2011 - 12 & 2012 - 13 ABOVE, ACTUALLY LET WORDS ARE NOT USED AND THIS ALSO S HOWS THAT MEANING AND INTERPRETATION OF THE WORDS PROPERTY IS LET CANNOT BE PROPERTY ACTUALLY LET OUT. IN OUR OPINION, IT TALKS OF PROPERTIES WHICH ARE HELD TO LETTING OUT HAVING INTENTION TO LET OUT IN THE RELEVANT YEAR COUPLED WITH EFFORTS MADE FOR L ETTING IT OUT. IF THESE CONDITIONS ARE SATISFIED, IT HAS TO BE HELD THAT PROPERTY IS LET AND THE SAME WILL FALL WITHIN THE PURVIEW OF THIS CLAUSE. WE FIND OURSELVES TO BE IN AGREEMENT WITH THE AFORESAID OBSERVATIONS OF THE COORDINATE BENCH OF THE TRIBUNA L, WHICH ANALYZING THE SCOPE AND GAMUT OF SEC. 23(1)(C) OF THE ACT, HAD THEREIN CONCLUDED THAT IN LIGHT OF THE WORDS PROPERTY IS LET USED IN CLAUSE (C) OF SEC. 23(1) OF THE ACT, UNLIKE THE TERM HOUSE IS ACTUALLY LET AS STANDS GATHERED FROM A CONJOI NT READING OF SUB - SECTION (2) TO (4) OF SEC. 23, IT CAN SAFELY AND INESCAPABLY BE GATHERED THAT THE CONSCIOUS, PURPOSIVE AND INTENTIONAL USAGE OF THE AFORESAID TERM PROPERTY IS LET IN SEC. 23(1)(C) OF THE ACT, CANNOT BE SUBSTITUTED BY THE TERM HOUSE I S ACTUALLY LET AS USED BY THE LEGISLATURE IN ALL ITS WISDOM IN SUB - SECTION (3) OF SEC. 23. THUS IT CAN SAFELY BE CONCLUDED THAT THE REQUIREMENT HOUSE IS ACTUALLY LET DURING THE YEAR IS NOT A PREREQUISITE FOR BRINGING THE CASE OF AN ASSESSEE WITHIN THE S WEEP OF SEC. 23(1)(C) OF THE ACT, AS LONG AS THE PROPERTY IS LET IN THE EARLIER PERIOD AND IS FOUND VACANT FOR THE WHOLE YEAR UNDER CONSIDERATION, SUBJECT TO THE CONDITION THAT SUCH VACANCY OF THE PROPERTY IS NOT FOR SELF OCCUPATION OF THE SAME BY THE AS SESSEE, WHO CONTINUES TO HOLD THE SAID PROPERTY FOR THE PURPOSE OF LETTING OUT. WE ARE IN AGREEMENT WITH THE AFORESAID OBSERVATIONS OF THE COORDINATE BENCH THAT THE USAGE OF THE TERM PROPERTY IS LET IN SEC. 23(1)(C) HAD PURPOSIVELY BEEN USED TO EXCLUDE T HOSE PROPERTIES FROM THE AMBIT OF THE CLAUSE WHICH ARE HELD BY THE OWNER FOR SELF OCCUPATION PURPOSES, BECAUSE EVEN THOUGH THE ALV OF ONE SELF OCCUPIED PROPERTY SO CHOSEN BY THE ASSESSEE IS TAKEN AT NIL, HOWEVER THE ALV OF ALL THE REMAINING SELF OCCUPI ED PROPERTIES ARE TO BE DETERMINED IN TERMS OF SEC. 23(1)(A) OF THE ACT. THUS TO OUR UNDERSTANDING THE TERM PROPERTY IS LET USED IN SEC. 23(1)(C) IS SOLELY WITH THE INTENT TO AVOID MISUSE OF DETERMINATION OF THE ALV OF SELF OCCUPIED PROPERTIES BY THE ASSESSES BY TAKING RECOURSE TO SEC. 23(1)(C), HOWEVER THE SAME CANNOT BE STRETCHED BEYOND THAT AND THE ALV OF A PROPERTY WHICH IS LET, BUT THEREAFTER REMAINS VACANT FOR THE WHOLE YEAR UNDER CONSIDERATION, THOUGH SUBJECT TO THE CONDITION THAT THE 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 U/S 23(1)(C) OF THE ACT. THUS IN LIGHT OF THE AFORESAID ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL AND THE REASONING S FLOWING THERE FROM, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IN THE PRESENT CASE HAD RIGHTLY DETERMINED THE ALV OF THE PROPERTY AT RS. NIL BY TAKING RECOURSE TO SEC. 23(1)(C) OF THE ACT. IN THIS REGARD WE ARE FURTHER OF THE VIEW THAT THE CIT(A ) HAD MISCONCEIVED THE JUDGMENT OF THE HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF VIKAS JAIN (SUPRA), AND ON A PERUSAL OF THE SAID JUDGMENT THEREIN FIND THAT THE HONBLE HIGH COURT IN THE CONCLUDING PARA 14 & 15 HAD THOUGH CONCLUDED THAT THE BENEF IT OF COMPUTING THE ALV U/S 23(1)(C) COULD NOT BE EXTENDED TO A CASE WHERE THE PROPERTY WAS NOT LET OUT AT ALL, WOULD HOWEVER DULY ENCOMPASS AND TAKE WITHIN ITS SWEEP CASES WHERE THE PROPERTY HAD REMAINED LET OUT FOR TWO OR MORE YEARS, BUT HAD REMAINED V ACANT FOR THE WHOLE OF THE PREVIOUS YEAR. THUS WE ARE OF THE VIEW THAT NOW WHEN IN THE CASE OF THE PRESENT ASSESSEE THE PROPERTY UNDER CONSIDERATION HAD REMAINED LET OUT UPTO 04.12.2008, AND THEREAFTER THOUGH COULD NOT BE LET OUT AND HAD REMAINED VACANT DU RING WHOLE OF THE YEAR UNDER CONSIDERATION, BUT ALSO HAD NEVER REMAINED UNDER THE SELF OCCUPATION OF THE ASSESSEE, THE SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 8 A.YS 2011 - 12 & 2012 - 13 COMPUTATION OF THE ALV U/S 23(1)(C) OF THE ACT, HAD RIGHTLY BEEN CARRIED OUT IN LIGHT OF THE AFORESAID JUDGMENT OF THE HONBLE HIGH C OURT. 7.2 THAT IN LIGHT OF OUR AFORESAID OBSERVATIONS THE GROUND OF APPEAL NO. 2 OF THE ASSESSEE IS ALLOWED AND THE ADDITION OF RS. 8,40,000/ - MADE BY THE A.O AND AS SUCH SUSTAINED BY THE CIT(A) IS HEREIN VACATED. WE FIND OURSELVES TO BE IN AGREEMENT WITH THE AFORESAID OBSERVATIONS OF THE COORDINATE BENCH OF THE TRIBUNAL, WHICH WE FIND, HAD WHILE ANALYZING THE SCOPE AND GAMUT OF SEC. 23(1)(C) OF THE ACT, CONCLUDED THAT IN LIGHT OF THE WORDS PROPERTY IS LET USED IN CLAUSE (C) OF SEC. 23(1) OF THE ACT, UNLIKE THE TERM HOUSE IS ACTUALLY LET AS STANDS GATHERED FROM A CONJOINT READING OF SUB - SECTION (2) TO (4) OF SEC. 23, IT CAN SAFELY AND RATHER INESCAPABLY BE GATHERED THAT THE CONSCIOUS, PURPOSIVE AND INTENTIONA L USAGE OF THE AFORESAID TERM PROPERTY IS LET IN SEC. 23(1)(C) OF THE ACT, CANNOT BE SUBSTITUTED BY THE TERM HOUSE IS ACTUALLY LET AS USED BY THE LEGISLATURE IN ALL ITS WISDOM IN SUB - SECTION (3) OF SEC. 23. THUS , IT CAN SAFELY BE CONCLUDED THAT THE R EQUIREMENT THAT THE HOUSE IS ACTUALLY LET DURING THE YEAR IS NOT TO BE TAKEN AS A PREREQUISITE FOR BRINGING THE CASE OF AN ASSESSEE WITHIN THE SWEEP OF SEC. 23(1)(C) OF THE ACT, AS LONG AS THE PROPERTY IS LET IN THE EARLIER PERIOD AND IS FOUND VACANT F OR THE WHOLE YEAR UNDER CONSIDERATION, SUBJECT TO THE CONDITION THAT SUCH VACANCY OF THE PROPERTY IS NOT FOR SELF OCCUPATION OF THE SAME BY THE ASSESSEE WHO CONTINUES TO HOLD THE SAME FOR THE PURPOSE OF LETTING OUT. WE ARE IN AGREEMENT WITH THE AFORESAID O BSERVATIONS OF THE COORDINATE BENCH THAT THE USAGE OF THE TERM PROPERTY IS LET IN SEC. 23(1)(C) HAD PURPOSIVELY BEEN USED TO EXCLUDE THOSE PROPERTIES FROM THE AMBIT OF THE CLAUSE WHICH ARE HELD BY THE OWNER FOR SELF OCCUPATION PURPOSES, BECAUSE EVEN THOU GH THE ANNUAL VALUE OF ONE SELF OCCUPIED PROPERTY SO CHOSEN BY THE ASSESSEE IS TAKEN AT NIL, HOWEVER THE ANNUAL VALUE OF ALL THE REMAINING SELF OCCUPIED PROPERTIES ARE TO BE DETERMINED IN TERMS OF SEC. 23(1)(A) OF THE ACT. THUS , TO OUR UNDERSTANDING , THOUGH THE TERM PROPERTY IS LET USED IN SEC. 23(1)(C) IS SOLELY WITH THE INTENT TO AVOID MISUSE OF DETERMINATION OF THE ANNUAL VALUE OF SELF OCCUPIED PROPERTIES BY THE ASSESSES BY TAKING RECOURSE TO SEC. 23(1)(C), HOWEVER , THE SAME CANNOT BE STRETCHED BEYOND THAT AND THE ANNUAL VALUE OF A PROPERTY WHICH IS LET, BUT THEREAFTER REMAINS VACANT FOR SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 9 A.YS 2011 - 12 & 2012 - 13 THE WHOLE YEAR UNDER CONSIDERATION, THOUGH SUBJECT TO THE CONDITION THAT THE SAME IS NOT PUT UNDER SELF OCCUPATION OF THE ASSESSE E AND IS HELD FOR THE PURPOSE OF LETTING OUT OF THE SAME, WOULD CONTINUE TO BE DETERMINED U/S 23(1)(C) OF THE ACT. THUS , IN LIGHT OF THE AFORESAID ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL AND THE REASONINGS FLOWING THERE FROM, WE ARE OF THE CONSIDER ED VIEW THAT THE ASSESSEE IN THE PRESENT CASE HAD RIGHTLY DETERMINED THE ANNUAL VALUE OF THE PROPERTY AT NIL BY TAKING RECOURSE TO SEC. 23(1)(C) OF THE ACT. 8. WE MAY FURTHER OBSERVE THAT THE CIT(A) HAD MISCONCEIVED THE JUDGMENT OF THE HONBLE HIGH C OURT OF ANDHRA PRADESH IN THE CASE OF VIVEK JAIN VS. ACIT (2011) 337 ITR 74 (AP). WE FIND THAT IN THE SAID JUDGMENT THE HONBLE HIGH COURT IN THE CONCLUDING PARA 14 & 15 HAD OBSERVED THAT THOUGH THE BENEFIT OF COMPUTING THE ALV U/S 23(1)(C) COULD NOT BE EXTENDED TO A CASE WHERE THE PROPERTY WAS NOT LET OUT AT ALL, HOWEVER THE SAME WOULD DULY ENCOMPASS AND TAKE WITHIN ITS SWEEP CASES WHERE THE PROPERTY HAD REMAINED LET OUT FOR TWO OR MORE YEARS, BUT HAD REMAINED VACANT FOR THE WHOLE OF THE PREVIOUS YEAR . THUS , WE ARE OF THE CONSIDERED VIEW THAT NOW WHEN IN THE CASE OF THE PRESENT ASSESSEE THE PROPERTY UNDER CONSIDERATION HAD REMAINED LET OUT FOR A PERIOD OF 36 MONTHS , AND THEREAFTER THOUGH COULD NOT BE LET OUT AND HAD REMAINED VACANT DURING WHOLE OF THE YE AR UNDER CONSIDERATION, BUT HAD NEVER REMAINED UNDER THE SELF OCCUPATION OF THE ASSESSEE, THUS , NO INFIRMITY EMERGES FROM THE COMPUTATION OF THE ANNUAL VALUE OF THE SAID PROPERTY UNDER SE C. 23(1)(C) OF THE ACT BY THE ASSESSEE. 9. THAT IN LIGHT OF OUR AFORESAID OBSERVATIONS THE GROUND OF APPEAL NO. 1 AND 2 OF THE ASSESSEE ARE ALLOWED AND THE DETERMINATION OF THE ANNUAL VALUE OF THE PROPERTY UNDER CONSIDERATION VIZ. UNIT NO. 401 & 425 OF PROJECT BALAJI BHAVAN AT RS. 81,99,360/ - BY THE A.O BY TAKING RECOURSE TO SEC. 23(1)(A), WHICH THEREAFTER WAS SUSTAINED BY THE CIT(A) , IS VACATED. THE ORDER OF THE CIT(A) IS SET ASIDE IN TERMS OF OUR AFORESAID OBSERVATIONS . 10. THE APPEAL OF THE ASSESSEE IS ALLOWED . SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 10 A.YS 2011 - 12 & 2012 - 13 ITA NO. 66 /MUM/20 17 AY 20 12 - 1 3 1 1 . WE SHALL NOW TAKE UP THE APPEAL OF THE ASSESSEE FOR A.Y 20 1 2 - 1 3. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL : ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, 1. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN COMPUTING THE ANNUAL LETTING VALUE OF THE OFFICE PREMISES AT 90,19,296/ - ALTHOUGH THE SAME OUGHT TO BE TAKEN AS NIL UNDER SECTION 23(1)(C) OF THE A CT. 2. THE LEARNED ASSESSING OFFICER FURTHER ERRED IN ADOPTING DEEMED RENT RECEIVED OF RS. 81,99,360/ - AS PER A.Y 2009 - 10 IN RESPECT OF OFFICE PREMISES AT BALAJI BHAVAN AND FURTHER APPRECIATION OF 10% WHILE COMPUTING ANNUAL LETTING VALUE IN THE ASSESSMENT O RDER WHEN DURING THE PREVIOUS YEAR THE SAID PREMISES WAS LYING VACANT. 3. WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEAL THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT ACCEPTING THE PLEA OF THE APPELLANT THAT THE ANNUAL LETTING VALUE UNDER SECTION 23(1)(A) OF THE PREMISES AT BALAJI BHAVAN FOR THE VACANT PERIOD SHOULD BE COMPUTED BY ADOPTING THE REASONABLE RENT AS PER THE MUNICIPAL RATEABLE VALUE OF THE PREMISES. 1 2. BRIEFLY STATED, THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME FOR A .Y 201 2 - 1 3 ON 29.09.2012 , DECLARING INCOME OF RS. 1,25,34,810/ - . THE RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED AS SUCH UNDER SEC. 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE ACT. 1 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE A.O THAT THE BALANCE SHEET OF THE ASSESSEE REVEALED INVESTMENTS OF RS. 3,43,36,083/ - IN IMMOVABLE PROPERTIES . ON BEING CALLED UPON TO EXPLAIN THAT AS TO WHY THE DEEMED RENTAL INCOME OF THE AFORESAID PROPERTIES MAY NOT BE BROUGHT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY, THE ASSESSEE OBJECTED TO THE SAME. IT WAS THE CLAIM OF THE ASSESSEE THAT THE UNIT NO. 401 & 425 OF PROJECT BALAJI BHAWAN HAD REMAINED VACANT FOR THE ENTIRE YEAR AS THE TENANT VIZ. M/S STERLING CONSTRUCTION SYSTEM PVT. LTD. HAD VACATED THE PREMISES AND NO RENT, WHATSOEVER, HAD THEREAFTER BEEN RECEIVED. THE A.O FOUND THE AFORESAID CLAIM OF THE ASSESSEE AS FACTUALLY CORRECT. IT WAS SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 11 A.YS 2011 - 12 & 2012 - 13 OBSERVED BY THE A.O THAT THOUGH THE ASSESSEE HAD LET OUT UNIT NO. 401 & 425 OF PROJECT BALAJI BHAVAN TO M/S STERLING CONSTRUCTION P. LTD. FOR 36 MONTHS, VIDE AGREEMENT DATED APRIL, 2007 AND HAD OFFERED THE RENTAL INCOME RECEIVED THEREFROM AS ITS INCOME FROM HOUSE PROPER TY IN THE PRECEDING YEARS, BUT AFTER THE EXPIRY OF THE LICENSE PERIOD OF 36 MONTHS THE LICENSEE HAD VACATED THE PROPERTY AND CONVEYED ITS INTENTION OF NOT GETTING THE LICENSE AGREEMENT RENEWED ANY FURTHER. THE ASSESSEE IN ORDER TO DRIVE HOME ITS CONTENTION THAT THE ANNUAL VALUE OF THE PROPERTY WAS TO BE TAKEN AT NIL, SUBMITTED THAT ITS CASE WAS COVERED BY SEC. 23(1)(C) OF THE ACT. HOWEVER, THE A.O AFTER DELIBERATING ON THE CONTENTIONS ADVANCED BY THE ASSESSEE DID NOT FIND FAVOUR WITH THE SAME. THE A.O WAS OF THE VIEW THAT AS PER SEC. 23(1)(A) OF THE ACT, THE SUM FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET FROM YEAR TO YEAR WAS TO BE TAKEN AS THE DEEMED ANNUAL VALUE OF THE PROPERTY UNDER SEC. 22 OF THE ACT. FURTHER, THE A.O HELD A CONVICTION THAT THE PROVISIONS OF SEC. 23(1)(C) COULD BE PRESSED INTO SERVICE ONLY WHEN THE PROPERTY IS ACTUALLY LET AND HAD REMAINED VACANT FOR SOME PERIOD DURING THE YEAR. THUS, THE A.O WA S OF THE VIEW THAT AS THE PROPERTY UNDER CONSIDERATION VIZ. UNIT NO. 401 & 425 OF PROJECT BALAJI BHAVAN WAS NOT AT ALL LET OUT DURING WHOLE OF THE YEAR UNDER CONSIDERATION , HENCE THE PROVISIONS OF SEC. 23(1)(C) WOULD NOT BE APPLICABLE IN ITS CASE. ON THE B ASIS OF HIS AFORESAID OBSERVATIONS THE A.O COMPUTED THE ANNUAL VALUE OF THE PROPERTY AS PER SEC. 23(1)(A) AT RS. 90,19,296/ - . 1 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING AT LENGTH ON THE CONT ENTIONS ADVANCED BY THE ASSESSEE WAS HOWEVER NOT PERSUADED TO ACCEPT THE SAME AND UPHELD THE ORDER OF THE A.O IN CONTEXT OF THE ISSUE UNDER CONSIDERATION. 15. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT( A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. WE FIND THAT AS THE FACTS AND THE ISSUES INVOLVED IN THE PRESENT APPEAL OF THE ASSESSEE FOR A.Y 2012 - 13 REMAINS THE SAME AS WERE THERE BEFORE US IN THE APPEAL OF THE REVENUE FOR AY 2011 - 12, AS HAD BEEN ADJUDIC ATED BY US HEREINABOVE, THUS, OUR ORDER PASSED WHILE DISPOSING OFF THE APPEAL OF THE ASSESSEE FOR A.Y 2011 - 12 SHALL APPLY MUTATIS SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 12 A.YS 2011 - 12 & 2012 - 13 MUTANDIS FOR ADJUDICATING THE PRESENT APPEAL OF THE ASSESSEE F OR A.Y 2012 - 13 VIZ. ITA NO. 66/MUM/2017 . THE GROUND OF APPEAL NO S. 1 RAISED BY THE ASSESSEE IS THUS ALLOWED IN THE SAME TERMS. 16. THAT AS WE HAVE ACCEPTED THE CLAIM OF THE ASSESSEE THAT THE ANNUAL VALUE OF THE PROPERTY UNDER CONSIDERATION VIZ. UNIT NO. 401 & 425 OF PROJECT BALAJI BHAVAN WAS RIGHTLY COMPUTED BY IT AT NIL UNDER SEC. 23(1)(C) OF THE ACT, THUS , THE GROUNDS OF APPEAL NOS. 2 AND 3 WHEREIN THE QUANTIFICATION OF THE ANNUAL VALUE BY THE A.O HAS BEEN ASSAILED BEFORE US, HAVING BEEN RENDERED AS INFRUCTUOUS ARE DISMISSED. 17. THE APPEAL OF THE ASSESSEE IS ALLOWED. 18 . THAT BOTH THE APPEALS OF THE ASSESSEE I.E ITA NO. 2892 /MUM/20 16 AND ITA NO . 66 /MUM/20 17 FOR A.Y 20 1 1 - 1 2 AND A.Y 20 1 2 - 1 3 ARE ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 19 .09.2018. SD/ - SD/ - ( G. MANJUNATHA ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 19 .09 .2018 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI SONU REALTORS PVT. LTD. VS. DCIT - 14(3)(2), MUMBAI ITA NO. 2892/MUM/2016 & ITA NO. 66/MUM/2017 13 A.YS 2011 - 12 & 2012 - 13