Smt. Indu Chandra, Lucknow V. DCIT, Lucknow

ITA 96/LKW/2011

• Counselvise Citation: 9623714 RSA 2011
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 22-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K B AJAJ
• Assessee Lawyers: M L AGRAWAL
• Keywords: Salary income; Reason to believe
• Section: 148; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B - BENCH, LUCKNOW. BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI, ACCOUNTANT MEMBER I.T.A.NO.96(LKW.)/2011 A.Y. : 2004-05 SMT. INDU CHANDRA, VS. THE DY.CIT, RANGE-VI, B-43,BLOCK-J, ALIGANJ, LUCKNOW. LUCKNOW. PAN ABIPC8172D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.L.AGRAWAL, ADVOCATE RESPONDENT BY : SHRI P.K.BAJAJ, SR.D.R. O R D E R PER N.K.SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 8.12.2010 OF THE LD.CIT(A)-II, LUCKNOW. 2. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED IN THIS APPEAL : 1. THAT THE LEARNED ASSESSING OFFICER HAS ERRED BOTH IN LAW AS WELL AS IN FACTS ISSUING NOTICE U/S 148. 2. THAT THERE WAS NO REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT. 3. THAT THE PROCEEDINGS U/S 148 WERE NEITHER VALIDLY INITIATED NOR HAVE BEEN VALIDLY CONCLUDED. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX APPEAL HAS ERRED BOTH IN LAW WELL IN FACTS IN SUSTAINING THE ACTION OF THE LEARNED 2 ASSESSING OFFICER FOR OPENING THE ASSESSMENT BY ISSUING NOTICE U/S 148 . 5. THAT WITHOUT PREJUDICE TO THE GROUNDS NO. 1 TO 4 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AS WELL IN FACTS IN IGNORING THE AMENDMENT OF LAW RELATING TO TAXATION OF INCOME FROM PROPERTY WITH EFFECT FROM 1ST DAY OF APRIL 2002. THE AMENDED LAW WAS EFFECTIVE FROM A.Y. 2002-03 ONWARD. 6. THAT ACCORDING TO CLAUSE (C) OF SUB SECTION (1) OF SECTION 23 (SUBSTITUTED WITH EFFECT FROM 01.04.2002) WHERE THE PROPERTY OR ANY PART OF THE PROPERTY IS LET AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR AND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE BY THE OWNER IN RESPECT HEREOF IS LESS THAN THE SUM REFERRED TO IN CLAUSE (A) THE AMOUNT SO RECEIVED OR RECEIVABLE SHALL BE TREATED AS THE ALV. 7. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN RETAINING THE ADDITION OF RS.73,241/- AS INCOME FROM PROPERTY. 8. THAT THE LEARNED COMMISSIONER OF. INCOME TAX (APPEAL) HAS ERRED IN RETAINING THE ADDITIONS OF RS.38,717/- AND 14,156/- TOWARDS THE INCOME OF THE APPELLANT. 9. THAT THE ORDERS OF THE AUTHORITIES BELOW ARE AGAINST THE MERITS CIRCUMSTANCES AND LEGAL ASPECT OF THE CASE. 3. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE, AT THE VERY OUTSET, STATED THAT HE HAS INSTRUCTION NOT TO PRESS GROUNDS NO.1 TO 4 AND 8 TO 9. ACCORDINGLY, THE SAID GROUNDS ARE DISMISSED AS NOT PRESSED. 4. NOW, THE GROUNDS WHICH REMAIN FOR ADJUDICATION ARE THE GROUNDS NO.5 TO 7, WHEREIN THE GRIEVANCE OF THE ASSESSEE RELATES TO THE SUSTENANCE OF ADDITION OF RS.73,241 BY THE LD.CIT(A). 3 5. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME SHOWING TOTAL INCOME OF RS.54,000 AND THE SOURCE FOR THE SAID INCOME WAS DISCLOSED AS INCOME FROM SALARY. LATER ON, THE CASE WAS RE- OPENED UNDER SECTION 147/148 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). THE AO, DURING THE ASSESSMENT PROCEEDINGS, FOUND THE ASSESSEE TO BE OWNER OF A HOUSE PROPERTY AND OFFICE SPACE AT 5 TH FLOOR OF KAILASH KALA BUILDING, SHAHNAJAF ROAD, LUCKNOW, WHICH WAS STATED TO BE LYING VACANT SINCE FINANCIAL YEAR 2002-03. THE AO POINTED OUT THAT THE ASSESSEE HAD NOT SHOWN ANY INCOME FROM THE HOUSE PROPERTY UNDER SECTION 22 OF THE I.T.ACT. DURING THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE CERTAIN QUESTIONS RELATING TO THE SAID PROPERTY. THE QUESTIONS RAISED BY THE AO AND THE REPLIES GIVEN BY THE ASSESSEE WERE AS UNDER : 1. WHETHER HOUSE PROPERTY AT 5 TH FLOOR, KAILASH KALA BUILDING LET OUT? REPLY: NO. 2. ANY DOCUMENTARY EVIDENCE REGARDING EFFORTS MADE FOR LET OUT PROPERTY ADVERTISEMENT IN NEWSPAPER ETC. REPLY: NO. 3. HOW COME PROPERTY LYING VACANT FOR LAST 6 YEARS. REPLY: NOT SERVICED BY OPERATIONAL LIFT. 4. ANY OTHER PROPERTIES IN BUILDING LET OUT OR NOT. REPLY: YES, OTHER PROPERTIES IN BUILDING LET OUT FOR COMMERCIAL PURPOSES. 5.1 THE AO DID NOT FIND MERIT IN THE SUBMISSION OF THE ASSESSEE THAT THE PROPERTY REMAINED VACANT FOR NOT WORKING OF THE LIFT AND THAT THE LIFT WAS NOT REPAIRED FOR FIVE CONSECUTIVE YEARS. HE ESTIMATED THE FAIR MARKET RENT OF THE 4 PROPERTY AT RS.20,000 PER MONTH AND ACCORDINGLY ANNUAL VALUE OF THE PROPERTY AT RS.2,40,000 WAS ADDED TO THE INCOME OF THE ASSESSEE. 6. THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT(A). THE SUBMISSIONS MADE BEFORE HIM, AS NARRATED IN PARAGRAPH 4 OF THE IMPUGNED ORDER READ AS UNDER : 4. THE ASSESSEE OWNED OFFICE SPACE OF 850 SQ.FT. ON THE 5 TH FLOOR OF KAILASH KALA BUILDING AT SHAHNAJAF ROAD, LUCKNOW. THIS BUILDING IN THE BACK SIDE OF SHAHNAJAF ROAD. THE OFFICE SPACE OF ABOUT 850 SQ.FT. IS ON THE FIFTH FLOOR OF THE BUILDING AND IS NOT NOW SERVICED BY LIFT. THE OTHER PORTION OF THE FIFTH FLOOR OWNED BY ANOTHER OWNER IS ALSO LYING VACANT. THE 6 TH FLOOR OF THE SAID BUILDING OWNED BY OTHER OWNER IS ALSO VACANT. AS THE 5 TH FLOOR IS NOW NOT SERVICED BY LIFT AS IT BECAME NON- OPERATIVE IT IS NOT CAPABLE OF BEING LET OUT. THE ASSESSING OFFICER HAS ALSO ACCEPTED THAT THIS PORTION OWNED BY THE APPELLANT IS LYING VACANT FROM THE FINANCIAL YEAR 2002-03. PRIOR TO THIS IT WAS LET OUT TO MOBILINK AT A MONTHLY RENT OF RS.7,266/- PER MONTH. WHEN THE LIFT BECAME NON-OPERATIVE THEY VACATED THE PORTION OWNED BY APPELLANT AND SINCE THEN IT IS LYING VACANT. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT FOR A. Y. 2005-06 HAD WRONGLY INTERPRETED SECTION 23(1)(C) TO MEAN THAT THE ANNUAL LETTING VALUE OF SUCH A VACANT PORTION IS ALSO TAXABLE WHICH IS NOT CORRECT. THE OLD SECTION 23(1) OF THE I . T ACT, WAS SUBSTITUTED BY A NEW SECTION 23(1) BY THE FINANCE ACT, 2001 W.E.F. 01.04.2002 WITH A VIEW TO RATIONALIZE THE PROVISIONS RELATING TO INCOME FROM HOUSE PROPERTY. THE PROVISIONS OF SUBSTITUTED SECTION 23(1) WERE EXPLAINED BY CIRCULAR NO. 14 OF 2001 IN PARA 29.1 AND 29.2 IT HAS BEEN CLARIFIED AS UNDER: WHERE THE PROPERTY OR PART OF PROPERTY OR ANY PART OF THE PROPERTY IS LET OUT AND WAS VACANT DURING THE WHOLE OR ANY PART OF THE PREVIOUS YEAR AND OWING TO SUCH VACANCY THE ACTUAL RENT RECEIVED OR RECEIVABLE IS LESS THAN THE ALV THE SUM SO RECEIVED OR RECEIVABLE SHALL BE THE ALV. ' 5 THUS THE ASSESSING OFFICER HAD WRONGLY ESTIMATED THE ANNUAL LETTING VALUE FOR THIS OFFICE SPACE OWNED BY THE APPELLANT AND LYING VACANT SINCE 2002-03. THESE SUBMISSIONS WERE SENT TO THE ASSESSING OFFICER FOR A REMAND REPORT AND THE ASSESSING OFFICER VIDE REMAND REPORT DATED 28.08.2008 SUBMITTED AS UNDER:- THE PROPERTY IS SITUATED ON 5 TH FLOOR IN KAILASH KALA BUILDING AT SHAHNAJAF ROAD, LUCKNOW AND IS NOT SERVICED BY LIFT. THE ASSESSEE HAS CLAIMED THAT THE PROPERTY IS VACANT FROM F.Y. 2002-03 I.E. FROM FIVE FINANCIAL YEARS THUS IN TERMS OF SECTION 23(1) OF I.T. ACT, 1961 THE ALV ASSUMED BY THE ASSESSEE AS NIL SEEMS TO BE CORRECT.' THE ASSESSING OFFICER HAS ACCEPTED THIS FACT IN AY 2005-06. AS THE FACTS REGARDING THIS PROPERTY INCOME ARE THE SAME AS WERE IN ASSESSMENT YEAR 2005-06, THE ADDITION OF RS.2,40,000/- MADE BY THE ASSESSING OFFICER AS PROPERTY INCOME BE DELETED. 6.1 IT WAS FURTHER SUBMITTED THAT SINCE THE PROPERTY WAS LYING VACANT FROM FINANCIAL YEAR 2002-03 TILL ASSESSMENT YEAR 2005-06, NO INCOME WAS EARNED BY THE ASSESSEE. 7. THE LD.CIT(A) POINTED OUT THAT A REMAND REPORT WAS SOUGHT FROM THE A O IN THE ASSESSMENT YEAR 2005-06 WHEREIN IT WAS STATED AS UNDER : 'THE PROPERTY SITUATED ON 5 TH FLOOR IN KAILASH KALA BUILDING AT SHAHNAJAF ROAD, LUCKNOW AND IS NOT SERVICED BY LIFT. THE ASSESSEE HAS CLAIMED THAT THE PROPERTY IS VACANT FROM F.Y. 2002-03 I.E. FROM FIVE FINANCIAL YEARS THUS IN TERMS OF SECTION 23(1) OF THE I.T.ACT, 1961 THE ALV ASSUMED BY THE ASSESSEE AS NIL SEEMS TO BE CORRECT. 7.1 ACCORDING TO THE LD.CIT(A) HIS PREDECESSOR VIDE ORDER DATED 23.10.2008 FOR THE ASSESSMENT YEAR 2005-06, HAS DELETED THE ADDITION ON THE BASIS OF THE AFORESAID REMAND REPORT. HOWEVER, FOR THE YEAR UNDER 6 CONSIDERATION, THE LD.CIT(A) SUSTAINED THE ADDITION OF RS.73,241 BY OBSERVING AS UNDER: 4.2 THE FACTS OF THE CASE AND SUBMISSION OF APPELLANT HAVE BEEN CONSIDERED. THE REMAND REPORT AND THE FINDING OF MY PREDECESSOR IS RELATED TO A.Y.2005-06. EVERY ASSESSMENT IS AN INDEPENDENT ASSESSMENT YEAR. ADMITTEDLY, THE AFORESAID PREMISES WAS LET OUT AT A MONTHLY RENT OF RS.7,266/- UPTO A Y. 2002-03. IT IS ALSO A FACT THAT THE AFORESAID PREMISE HAS NOT BEEN L ET OUT FROM AY 2003-04. HENCE, IN THIS CASE, THE PROVISIONS OF SECTION 23(1)(A) OF THE I. T. ACT,1961 ARE APPLICABLE AND THE ANNUAL LETTING VALUE REQUIRED TO BE WORKED_ OUT. THE ASSESSING OFFICER HAS ESTIMATED THE FAIR MARKET RENT OF PROPERTY @ RS.24,000/- PER MONTH. HOWEVER, THE ASSESSING OFFICER HAS NOT GIVEN ANY BASIS FOR HIS ESTIMATION. UP TO A Y. 2002-03, THE MONTHLY RENT OF PROPERTY WAS RS.7266/-. THIS IS ACCEPTED FACT UPTO A Y. 2002-03. FOR THE A. Y. 2004-05, THE INCREASE IN THIS MONTHLY RENT MAY NOT BE MORE THAN 20% AND WHICH IS MOST REASONABLE. THUS, THE MONTHLY RENT OF THIS PROPERTY IS DETERMINED AT RS.8,719/- BY TAKING 20% INCREASE AND ACCORDINGLY THE ANNUAL LETTING VALUE IS WORKED OUT AT RS.104,630/-. THE ASSESSEE IS ALLOWED 30% DEDUCTION U/S 24 OF THE I.T.ACT. HENCE, THE ANNUAL LETTING VALUE OF PROPERTY FOR THE ASSESSMENT YEAR 2004-05 IS TAKEN AT RS.73,241/-. 8. NOW, THE ASSESSEE IS IN APPEAL. 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE PROPERTY IN QUESTION WAS EARLIER LET OUT, BUT REMAINED VACANT FROM FINANCIAL YEAR 2002-03 TILL THE YEAR UNDER CONSIDERATION AND NO INCOME WAS EARNED BY THE ASSESSEE. IT WAS STATED THAT THE PROVISIONS OF SECTION 23(1)(C) OF THE I.T.ACT ARE APPLICABLE TO THE FACTS OF THE PRESENT CASE BECAUSE THE ANNUAL LETTING VALUE FOR THE VACANT PORTION WAS NIL, THEREFORE, NO ADDITION WAS CALLED FOR. RELIANCE WAS PLACED ON THE DECISION OF THE I.T.A.T., MUMBAI BENCH C IN THE CASE OF PREMSUDHA EXPORTS (P.) LTD. VS. ACIT, CC-10, MUMBAI [2008] 110 ITD 7 158(MUM.). 10. IN HIS RIVAL SUBMISSIONS, THE LD.D.R. STRONGLY SUPPORTED THE ORDER OF THE LD.CIT(A) AND FURTHER SUBMITTED THAT THE DEEMING PROVISIONS CONTAINED IN SECTION 23(1)(A) OF THE ACT ARE APPLICABLE AND ACCORDINGLY ANNUAL LETTING VALUE WAS REQUIRED TO BE WORKED OUT IN ASSESSEES CASE, THEREFORE, THE ADDITION SUSTAINED BY THE LD.CIT(A) IS JUSTIFIED. 11. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND THE MATERIAL ON RECORD, IT IS NOTICED 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 SIMILAR ISSUE, THE I.T.A.T. MUMBAI BENCH C IN THE CASE OF PREMSUDHA EXPORTS (P.) LTD. VS. ACIT,C.C.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 I1] 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 REVENUE 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 SITUATIONS 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 WHOLE OF THE SAME YEAR. [PARA 12] 8 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 AND 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 PROPERTY 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 LEGISLATURE 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. THEREFORE, 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 9 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 SAME 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 PLACED 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 RESOLUTION, 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 OBSERVATIONS 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 YEAR 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.-10,MUMBAI (SUPRA), WE ARE OF 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 OF THE PROPERTY IN ORDER TO COMPUTE THE INCOME FROM HOUSE PROPERTY AS 10 PROVIDED IN SECTION 23(1)(C) OF THE ACT. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD.CIT(A) AND THE GROUNDS OF APPEAL NO.5 , 6 & 7 RAISED BY THE ASSESSEE ARE ALLOWED. 12. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.4.11. SD. SD. (H.L.KARWA) (N.K.SAINI) VICE PRESIDENT ACCOUNTANT MEMBER APRIL 29TH ,2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R.,ITAT, LUCKNOW. SRIVASTAVA.