Deduction on the Rental Income of Second House Property under the Income Tax Act

IN THE INCOME TAX APPELLATE TRIBUNAL
“SMC” BENCH, AHMEDABAD
(through web-based video conferencing platform)
BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT
ITA No. 875/Ahd/2019
Assessment Year : 2016-17

Taheri Hatim Sarsanwala,
5th Floor, Kairos,
Opp. Gandhi Labour Institute,
Drive-in-Road, Ahmedabad-52
PAN : BMSPS 4189 M

vs

Asst. Commissioner of
Income-Tax,
Circle International Taxation,
Vadodara

Assessee by : Shri Sanjay R. Shah, CA
Revenue by : Shri V.K. Singh, Sr DR

Date of Hearing : 25/11/2021

Date of Pronouncement: 01/12/2021

O R D E R

The assessee is in appeal before the Tribunal against the order of learned Commissioner of Income-Tax (Appeals)-13, Ahmedabad [“CIT(A)” in short] dated 25.03.2019 passed for Assessment Year 2016-17

2. The brief facts of the case are that the assessee has filed his return of income on 01.03.2017 declaring total income at Rs.6,21,430/-. The computation of income is available on page No.2 of the paper-book. The assessee has disclosed the house property income, i.e. (i) Rs.4,43,760/- from Showroom No.2 D & C Kairos, Kairos, Opp. Mahatma Gandhi Labour Institute, Drive-inRoad, Ahmedabad and (ii) Rs.4,00,000/- from Flat No.C2-1116 at Shobha Ivory, A-Wing, Raviraj Astria, Kondhwa, Pune.

3. This was disallowed by the Assessing Officer in the assessment proceedings; however, on appeal, the learned CIT(A) has allowed the standard deduction with regard to the rental income earned from Ahmedabad property but disallowed the same from the rental income of Pune flat. The reasoning given by both the Revenue Authorities are without any coherence with the nature of the dispute. The learned First Appellate Authority, in its findings extracted supra, disputes the receipt of rental income, viz. the assessee failed to give rent agreement; the receipts are issued by the assessee etc. To my mind, firstly, the Assessing Officer ought to have called for the tenant and ought to have ascertained the position as to whether this flat was occupied by anybody. A report could be called for from the Society at C2- 1116 at Shobha Ivory, Pune. Further report could be called for as to whether any electricity consumption was there or not. The assessee has been stated to be a non-resident individual and having income from rent of house properties. No inquiry was conducted and gross rental income is being assessed under the garb of disbelieving house property income. To my mind, the reasoning given by the Revenue is not sufficient to reject the claim of the assessee. Therefore, I allow this appeal and direct the Assessing Officer to grant standard deduction even on the second house property income, i.e. on the rental income of Rs.4,00,000/- received by the assessee from letting out Flat No.C2-1116 at Shobha Ivory-Pune.

4. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 1st December, 2021 at Ahmedabad.

Please find attached the enclosed file for the full judgement.