Section 23 of the Income-tax Act, 1961

Last updated: 16 October 2007

Court :
IN THE ITAT MUMBAI BENCH ‘C’

Brief :
Section 23 of the Income-tax Act, 1961 - Income from house property - Annual value - Assessment year 2003-04 - Whether words, ‘property is let’ as appearing in section 23(1)(c) mean actual letting out of property - Held, no - Whether if a property is held with an intention to let out coupled with efforts made for letting it out, it could be said that, such a property is a let out property and, therefore, its annual letting value would be worked out as per clause (c) of section 23(1) - Held, yes Words and phrases : Words ‘property is let’ as appearing in section 23(1)(c) of the Income-tax Act, 1961 Facts The assessee-company was engaged in the business of export of diamonds. As per the Memorandum of Association, the assessee was also entitled to purchase the property for letting it out and to earn rental income. The assessee had purchased a property. During the previous year, the said property remained vacant, though the assessee made continuous efforts to let out the property. The assessee submitted that the annual letting value (ALV) of the property should be computed as per provisions of clause (c) of section 23(1), and that since the property remained vacant for the whole year, the ALV of the property had to be taken as nil. The Assessing Officer did not deliberate on the submission of the assessee and computed the ALV of the impugned property as per clause (a) of section 23(1) and determined it at 8.5 per cent of the cost of property. On appeal, the Commissioner (Appeals) upheld the action of the Assessing Officer. On second appeal :

Citation :
Premsudha Exports (P.) Ltd. v. Assistant Commissioner of Income-tax, Central Circle 10, Mumbai