| |
| The Tax Publishers2020 TaxPub(DT) 2626 (Hyd-Trib) INCOME TAX ACT, 1961
Section 23
Where the property that was let out by assessee was not just an open land but with a shed thereon, which was treated as a godown and that godown was built on a plot, the income from such godown had rightly been treated as 'Income from house property'.
|
Income from house property - Annual value - Property let out not an open land but with a shed thereon -
Assessee showed 'Nil' income from one of the properties owned by him. AO observed that as per section 23, the assessee should have adopted fair rental value and offered the same to tax. Therefore, he adopted the rental income earned by the assessee during the earlier financial year with 10% hike as the rental income for the relevant assessment year and accordingly, made addition under income from house property. Assessee submitted that the said property was an open land with a small shed and it was given to a gas company on rent as godown, therefore, the rent paid by the said company was towards the land. He further submitted that the said land was vacated for the whole year and that the same company again took the said property on lease in the subsequent year for a short duration, thus, the rent paid in the earlier years alone should have been adopted as fair rental value without any hike of 10%. Held: It was found that the rented property was not just an open land but with a shed thereon, which was treated as a godown. In the schedule of rental deed, it was mentioned that godown was built on a plot and therefore, income from such godown had rightly been treated as 'Income from house property' and even in the earlier years, the income received from the same godown had been offered/treated as income from house property. However, there was merit in the contention of the assessee that hike of 10% on rent should not have been adopted, but the rental paid by the said party prior to vacating the same should have been adopted as fair rental value for the period when the property was vacant. Therefore, the AO was directed to re-compute the income from the said property by adopting the rent paid by the party before the said property was vacated as fair rental value.
REFERRED :
FAVOUR : Partly in favour of assessee.
A.Y. : 2011-12
INCOME TAX ACT, 1961
Section 23
 SUBSCRIBE FOR FULL CONTENT
|