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| The Tax Publishers2019 TaxPub(DT) 4832 (Bom-HC) : (2020) 268 TAXMAN 0443 INCOME TAX ACT, 1961
Section 23
Since during the period the property was legally not occupiable and not occupied because the building in which property was situated was not given Occupancy Certificate (OC), therefore, issue for charging of tax on notional rental basis and the question of interpretation of section 23(1)(a) did not arise at all.
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Income from house property - Chargeability - Notional rent alleged to be taxable on a property which was not occcupiable -
Assessee had purchased a commercial property. The intention of assessee was to let out the property for earning rental income. The building was not given Occupancy Certificate (OC) and was issued later on. In the meantime, assessee had leased out the property. Revenue alleged that, as assessee had leased out the property from the date when conveyance deed was executed without waiting for OC, therefore, the entire period during which the assessee could have let the said property, tax on notional basis should be charged. Held: Contention of revenue was fallacious. In plain terms, during the disputed period, for which revenue sought to charge notional rent, the property was legally not occupiable and not occupied. Charging of tax on notional rental basis and the question of interpretation of section 23(1)(a) did not arise at all. The issue only arose because assessee computed the notional rental receipts for the said period and claimed the vacancy allowance, which was under mistaken belief of law.
REFERRED : Vivek Jain v. Asstt. CIT (2011) 337 ITR 74 (AP) : 2011 TaxPub(DT) 1986 (AP-HC) and Sharan Hospitality (P) Ltd. v. Dy. CIT [ITA No. 6717/Mum/2012, dt. 12-9-2016] : 2016 TaxPub(DT) 4223 (Mum)
FAVOUR : In assessee's favour.
A.Y. :
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