Meena Dellip Kotecha

1 Pradhan Appartment, Near Anglo Urdu School,

Pratap Nagar, Ring Road, Jalgaon-425001
REF. NO.KDK/2011-12/Pen/1 21/01/2019

The ITO
Ward 1(1),Jalgaon.

Dear Sir,
RE: - A.Y. 2011-12 Notice u/s 271(1)(c).PAN :BIMPK5636B
With reference to the above &in response to your notice, we write to you as under:
1. That I have received your above said notice calling upon me to show cause so as to why the
above said penalty should not be levied on me for the alleged defaults mentioned in the said
notice.
2. Without prejudice to the above, I respectfully submit that I have not committed any such
default& that no penalty is leviable in my case. I have neither concealed my income nor have
I furnished inaccurate particulars of my income.
3. You have assessed total income of Rs. 24,60,980/- as against returned income thereby
making the additions of Rs. 24,59,170/-as follows:
Particulars Rs.
Returned Income 1,811/-
Add: Addition on account of sale proceeds of shares as
income from other sources of the Act 24,59,170/-
Assessed Income 24,60,980/-
4. However, the addition thus made is not accepted by me & have already preferred an appeal
before the Commissioner of Income Tax(A)-II, Nashik [See photocopy enclosed].
5. If my appeal is thus allowed, the penalty proceeding initiated by you shall not survive for
want of consideration. Moreover, my appeal is based on several cases & citations of various
authorities. Since the issues involved are of a controversial nature, the penalty proceedings
are likely to be affected directly by the outcome of the appeal.
6. I therefore request you to keep the intended penalty proceedings in abeyance till the
disposal of my appeal by the learned CIT (A)-II, Nashik.
Please acknowledge & oblige.
Thanking You,

Yours Faithfully,

(Karishma Dellip Kotecha)

 Miss. Karishma Dellip Kotecha
1 PradhanAppartment, Near Anglo Urdu School,
Pratap Nagar, Ring Road, Jalgaon-425001
REF. NO.KDK/2012-13/Pen/2 09/01/2019

The ITO
Ward 1(1),Jalgaon.

Dear Sir,
RE: - A.Y. 2012-13 Notice u/s 271(1)(c).PAN :BIMPK5636B
With reference to the above &in response to your notice, we write to you as under:
1. That I have received your above said notice calling upon me to show cause so as to why the
above said penalty should not be levied on me for the alleged defaults mentioned in the said
notice.
2. Without prejudice to the above, I respectfully submit that I have not committed any such
default& that no penalty is leviable in my case. I have neither concealed my income nor have
I furnished inaccurate particulars of my income.
3. You have assessed total income of Rs. 1,09,50,129/- as against returned income
thereby making the additions of Rs. 1,05,49,448/-as follows:
Particulars Rs.
Returned Income 4,00,681/-
Add: Addition on account of sale proceeds of shares as income from
other sources of the Act 1,05,49,448/-
Assessed Income 1,09,50,129/-
4. However, the addition thus made is not accepted by me & have already preferred an appeal
before the Commissioner of Income Tax(A)-II, Nashik [See photocopy enclosed].
5. If my appeal is thus allowed, the penalty proceeding initiated by you shall not survive for
want of consideration. Moreover, my appeal is based on several cases & citations of various
authorities. Since the issues involved are of a controversial nature, the penalty proceedings
are likely to be affected directly by the outcome of the appeal.
6. I therefore request you to keep the intended penalty proceedings in abeyance till the
disposal of my appeal by the learned CIT (A)-II, Nashik.
Please acknowledge & oblige.
Thanking You,
Yours Faithfully,

(Karishma Dellip Kotecha)

Dated 10th of January,2019
To
The Assistant Commissioner of Income Tax
Central Circle-1 Nashik -422002.
Dear Sir
Ref:- Pan no ABMPK4173D A.Y. 2011-12
Sub: Rectification OF MISTAKE U/S 154

This has reference to the above subject the assessee most respectfully submit to your
Honour as under:-

I am in receipt of assessment order passed u/s 147 r.w.s 143(3) of the Income Tax
Act,1961 for A.Y.2011-12. However On perusal of assessment order passed u/s 147
r.w.s 143(3) by your Honour it has been observed that less credit for taxes paid of TDs
of Rs 7645+ taxes paid Rs 85,81,406/- totaling to Rs 85,89,051/-not given .Consequent to
less credit for taxes paid more interest u/s234A, 234B and 234C has been charged and
more demand is raised . We are enclosing herewith copy of 26AS ,statement of taxes
paid/adjustment of refund etc. and TDS certificate is enclosed herewith for your kind
reference. Non allowance of credit is a mistake which can be rectifiable u/s154 of IT Act,
1961 . Moreover assessment has been completed/s 143(3) r.w.s153A where the credit for
the taxes and no demand has been raised.
Thus it is humbly submitted to your Honour to kindly rectify the aforesaid mistake and pass
the necessary rectification order u/s154 of Income Tax Act,1961 and cancel the demand
from the system .
Kindly take the above submission on record and do the needful.
Thanking you
Yours faithfully.

Ashok Vijaykumar Kotecha

Encl1. Copy of 26AS and TDS certificate of Rs 7645/-

Dated 10th of January,2019
To
The Assistant Commissioner of Income Tax
Central Circle-1 Nashik- 422002.

Dear Sir

Ref:- Pan no ALIPK3264H A.Y. 2011-12

Sub: Rectification OF MISTAKE U/S 154

This has reference to the above subject the assessee most respectfully submit to your
Honour as under:-

I am in receipt of assessment order passed u/s 147 r.w.s 143(3) of the Income Tax
Act,1961 for A.Y.2011-12. However On perusal of assessment order passed u/s 147
r.w.s 143(3) by your Honour it has been observed that less credit for taxes paid of Rs
TDS of Rs 63,292/-+ Rs 572170/- for payment of taxes totaling to Rs 635462/-not given.
Consequent to less credit for taxes paid more interest u/s234A, 234B and 234C has been
charged and more demand is raised . We are enclosing herewith copy of 26AS,statement of
taxes paid is enclosed herewith for your kind reference. Non allowance of credit is a
mistake which can be rectifiable u/s154 of IT Act, 1961 . Moreover assessment has been
completed/s 143(3) r.w.s153A where the credit for the taxes and no demand has been
raised.
Thus it is humbly submitted to your Honor to kindly rectify the aforesaid mistake and pass
the necessary rectification order u/s154 of Income Tax Act,1961 and cancel the demand
from the system .
Kindly take the above submission on record and do the needful.
Thanking you
Yours faithfully.

(Mrs Jyoti Ashok Kotecha)

Encl1. Copy of 26AS

Dated 10th of January,2019
To
The Assistant Commissioner of Income Tax
Central Circle-1 Nashik-422002.

Dear Sir

Ref:- Pan no AATPK1231C A.Y. 2011-12

Sub: Rectification OF MISTAKE U/S 154

This has reference to the above subject the assessee most respectfully submit to your
Honour as under:-

I am in receipt of assessment order passed u/s 147 r.w.s 143(3) of the Income Tax
Act,1961 for A.Y.2011-12. However On perusal of assessment order passed u/s 147
r.w.s 143(3) by your Honour it has been observed that less credit for taxes paid of Rs
TDS of Rs 65,929/-+ Rs 481550/- for payment of taxes totaling to Rs 547479/-not given.
Consequent to less credit for taxes paid more interest u/s234A, 234B and 234C has been
charged and more demand is raised . We are enclosing herewith copy of 26AS, statement of
taxes paid is enclosed herewith for your kind reference. Non allowance of credit is a
mistake which can be rectifiable u/s154 of IT Act, 1961 . Moreover assessment has been
completed/s 143(3) r.w.s153A where the credit for the taxes and no demand has been
raised.
Thus it is humbly submitted to your Honour to kindly rectify the aforesaid mistake and pass
the necessary rectification order u/s154 of Income Tax Act,1961 and cancel the demand
from the system .
Kindly take the above submission on record and do the needful.
Thanking you
Yours faithfully.

(Mrs Meena Dellip Kotecha)

Encl1. Copy of 26AS

Dated15th of May,2017
To
The Dy. Commissioner of Income Tax
Central Circle-1 Nashik
Dear Sir
Ref:- Pan no AAFCM5940D A.Y. 2010-11
Sub: Rectification OF MISTAKE U/S154
This has reference to the above subject the assessee most respectfully submit to your
Honour as under:-
The assessee had filed return of income for A.Y. 2010-11 vide Efiling acknowledgement
receipt no 165160601300910 claiming refund of Rs 61,533. On perusal of intimation
u/s143(1)(a)by CPC, it has been observed that less credit for taxes paid of Rs
5,22,417/- i.e (Total prepaid taxes claimed in the return of Rs 2,06,47,488/-Rs
2,01,25,071/-) credit while processing intimation ) has been given .Consequent to less
credit for taxes paid more interest u/s234A, 234B and 234C has been charged . We are
enclosing herewith copy of 26AS and intimation u/s143(1)(a) for your kind reference. Non
allowance of credit is a mistake which can be rectifiable u/s154 of IT Act, 1961 . Moreover
assessment has been completed/s 143(3) r.w.s153A and no demand has been raised.
Thus it is humbly submitted to your Honour to kindly rectify the aforesaid mistake and pass
the necessary rectification order u/s154 of Income Tax Act,1961 and cancel the demand
from the system .
Kindly take the above submission on record and do the needful.
Thanking you
Yours faithfully.
For Mahavir Civil Engineering And Services Pvt. Ltd.

Authorised Signatory
Encl1. Copy of 26AS and intimation u/s 143(1) (a) and copy of Acknowledgement
 [2010] 188 Taxman 140 (Bombay)
HIGH COURT OF BOMBAY
Commissioner of Income-tax
v.
Gopal Purohit
DR. D.Y. CHANDRACHUD AND J.P. DEVADHAR, JJ.
IT APPEAL NO. 1121 OF 2009
JANUARY 6, 2010

Section 45, read with section 28(i) of the Income-tax Act, 1961 - Capital gains -
Chargeable as - Whether where Tribunal had a pure finding of fact that assessee
was engaged in two different types of transactions, first set of transactions
involving investment in shares and second set of transactions involving dealing
in shares (without delivery) for purposes of business, it had correctly held that
delivery-based transactions should be treated as those in nature of investment
transactions and profit received therefrom should be treated either as short-term
or as long-term capital gain, depending upon period of holding and profit from
other transactions should be treated as business income - Held, yes
Section 143 of the Income-tax Act, 1961 - Assessment - General - Whether though
principle of res judicata is not applicable to assessment proceedings, yet there
ought to be uniformity in treatment and consistency when facts and
circumstances are identical - Held, yes
Section 4, read with section 145 of the Income-tax Act, 1961 - Income -Chargeable
As - Whether though entries in books of account alone are not conclusive proof
to decide income, yet presentation in books of account is most crucial source of
gathering intention of assessee as regards nature of transaction - Held, yes
Ms. Suchitra Kamble for the Appellant. S.C. Tiwari and R. Asokan for the Respondent.
ORDER

1. The following questions of law have been formulated in the appeal filed by the revenue
against the judgment of the Income-tax Appellate Tribunal, dated 10-2-2009 :
"(a)Whether, on the facts and circumstances of the case and in law, the Hon'ble ITAT
was justified in treating the income from sale of 7,59,003 shares for Rs. 5,00,12,879 as
an income from short-term capital gain and sale of 3,88,797 shares for Rs. 6,65,02,340
as long-term capital gain as against the "Income from business" assessed by the
Assessing Officer?
(b)Whether, on the facts and circumstances of the case and in law, the Hon'ble ITAT
was justified in holding that principle of consistency must be applied here as authorities
did not treat the assessee as a share trader in preceding year, in spite of existence of
 similar transaction, which cannot in any way operate as res judicata to preclude the
authorities from holding such transactions as business activities in current year?
(c)Whether, on the facts and circumstances of the case and in law, the Hon'ble ITAT
was justified in holding that presentation in the books of account is the most crucial
source of gathering intention of the assessee as regards to the nature of transaction
without appreciating that the entries in the books of account alone are not conclusive
proof to decide the income?"
2. The Tribunal has entered a pure finding of fact that the assessee was engaged in two different
types of transactions. The first set of transactions involved investment in shares. The second set
of transactions involved dealing in shares for the purposes of business (described in paragraph
8.3 of the judgment of the Tribunal as transactions purely of jobbing without delivery). The
Tribunal has correctly applied the principle of law in accepting the position that it is open to an
assessee to maintain two separate portfolios, one relating to investment in shares and another
relating to business activities involving dealing in shares. The Tribunal held that the delivery
based transactions in the present case, should be treated as those in the nature of investment
transactions and the profit received therefrom should be treated either as short-term or, as the
case may be, long-term capital gain, depending upon the period of the holding. A finding of fact
has been arrived at by the Tribunal as regards the existence of two distinct types of transactions
namely, those by way of investment on one hand and those for the purposes of business on the
other hand. Question (a) above, does not raise any substantial question of law.
3. Insofar as Question (b ) is concerned, the Tribunal has observed in paragraph 8.1 of its
judgment that the assessee has followed a consistent practice in regard to the nature of the
activities, the manner of keeping records and the presentation of shares as investment at the end
of the year, in all the years. The revenue submitted that a different view should be taken for the
year under consideration, since the principle of res judicata is not applicable to assessment
proceedings. The Tribunal correctly accepted the position, that the principle of res judicata is not
attracted since each assessment year is separate in itself. The Tribunal held that there ought to be
uniformity in treatment and consistency when the facts and circumstances are identical,
particularly in the case of the assessee. This approach of the Tribunal cannot be faulted. The
revenue did not furnish any justification for adopting a divergent approach for the assessment
year in question. Question (b), therefore, does not also raise any substantial question.
4. Insofar as Question (c ) is concerned, again there cannot be any dispute about the basic
proposition that entries in the books of account alone are not conclusive in determining the
nature of income. The Tribunal has applied the correct principle in arriving at the decision in the
facts of the present case. The finding of fact does not call for interference in an appeal under
section 260A. No substantial question of law is raised. The appeal is accordingly dismissed.
■■
 In favour of assessee
Subject: STCG vs Business income

[2018] 96 taxmann.com 253 (Mumbai - Trib.)/[2018] 172 ITD 266 (Mumbai - Trib.)
IT : Where assessee owned a house property which remained
vacant throughout relevant year as he could not find a suitable
tenant despite writing various letters to concerned builder, he was
eligible to claim vacancy allowance under section 23(1)(c) and,
thus, rental income from said property was rightly declared at nil

[2018] 96 taxmann.com 253 (Mumbai - Trib.)

IN THE ITAT MUMBAI BENCH 'G'
Sachin R. Tendulkar
v.
Deputy Commissioner of Income-tax,-23(3) Mumbai*
SHAMIM YAHYA, ACCOUNTANT MEMBER
AND SANDEEP GOSAIN, JUDICIAL MEMBER
IT APPEAL NO. 3755 (MUM.) OF 2016
[ASSESSMENT YEAR 2012-13]
AUGUST 10, 2018

Section 23 of the Income-tax Act, 1961 - Income from house property - Annual
value (Vacancy allowance) - Assessment year 2012-13 - Whether where assessee
owned a house property which remained vacant throughout relevant year as he
could not find a suitable tenant despite writing various letters to concerned
builder, he was eligible to claim vacancy allowance under section 23(1)(c) and,
thus, rental income from said property was rightly declared at nil - Held, yes [Para
13] [In favour of assessee]
FACTS

The assessee owned a house property which remained vacant for the whole
year for the reason that the assessee could not find a suitable tenant. The
■
assessee claimed vacancy allowance under section 23(1)(c) and declared
income in respect of the said flat at Nil.
■ The Commissioner (Appeals) confirmed said addition.
 ■ On second appeal:
HELD

The assessee submitted that he has been unable to let out the property for the
concerned period. Hence, he is duly entitled to deduction under section
■
23(1)(c). In this regard, he submitted the copies of 3 letters written to the
builders. [Para 9]
From the provisions of section 23(1), it can be construed that in case the
property or part thereof was vacant during the period, the proportion deduction
should be allowed from the sum on which the property might reasonably be let
out from year to year. It is the plea of the assessee that he had made
■
reasonable effort by requesting the builder to identify the tenants for the
concerned flat. Since appropriate tenant could not be find out, the flat remained
vacant. Hence, the assessee has claimed benefit of section 23(1)(c) which duly
permits deduction in this regard. [Para 12]
The assessee has claimed that the said flat had remained vacant throughout
the year despite assessee's reasonable effort to let out the same. That the
assessee had requested the builder to identify the tenants. In this regard, the
assessee has submitted three letters written to the builder. It may be noted that
as emanating from the records and the letter, the same builder had identified
the tenant for another flat of the assessee which was let out and whose rent has
been offered and accepted for taxation. In this factual scenario, the authorities
below have doubted the veracity of these letters and doubted the credentials of
the assessee's claim. This does not display application of mind to the facts of
the case. The assessee is a well renowned cricketer. He is furnishing the return
of income of Rs. 61,23,14,400. The let out value of the property in dispute is
assessed as only Rs. 1,26,000 by the Commissioner (Appeals) as rent for the
whole year. When the same builder has helped the assessee to find tenant for
■ another flat, why his letters to the same builder to help him identify one more
tenant, can be considered as fake, defies logic. That the assessee should
maintain a dispatch register for his letters as expected by the authorities below,
is also abnormal expectation. That the assessee should get stamped receipt
from the builder for the receipt of his letters, is equally quixotic proposition. In
these circumstances, the insinuation that the assessee has submitted bogus
and fake documents to support the case that reasonable efforts were made to
find out a tenant for the vacant flat, is not sustainable in law. The expectation
that despite his unarguably busy professional engagements commanding huge
amount of money assessee should have embarked upon and displayed a more
robust and exuberant expedition to find a tenant for his vacant flat by
approaching other real estate brokers and keeping an infallible record thereof,
is beyond normal conception. Hence, there is no hesitation in setting aside the
orders of the authorities below and deleting the addition. [Para 13]
 ■ In the result, the appeal by the assessee stands allowed. [Para 14]
CASES REFERRED TO

Premsudha Exports (P.) Ltd. v. Asstt. CIT [2008] 110 ITD 158 (Mum.) (para 6), Kamal
Mishra v. ITO [2008] 19 SOT 251 (Delhi) (para 6) and Asstt. CIT v. Dr. Prabha Sanghi [2012]
27 taxmann.com 317/139 ITD 504 (Delhi) (para 6).
Pankaj Jain for the Appellant. V. Vidhyadhar for the Respondent.
ORDER

Shamim Yahya, Accountant Member - This appeal by the assessee is directed against the
order of the Commissioner of Income Tax (Appeals)-34, Mumbai dated 15.03.2016 and pertains
to the assessment year 2012-13.
2. The grounds of appeal read as under:
The Commissioner of Income Tax (Appeals)-34, Mumbai [hereinafter referred to as the CIT (A)]
erred in arriving at the deemed rental income in respect of the vacant flat situated at Sapphire
Park, Balewadi, Pune @ Rs.15,000 per month and computing the Annual Rent Receivable for
the said flat at Rs.1,80,000/- and confirming the addition made by the AO on deemed rental
income for the said flat at Rs.1,26,000/- as against Rs.8,60,445/- made by him.
The Appellant submits that since the property has not been let out and the Appellant has not
derived any benefit therefrom during the year the AO ought to have granted vacancy allowance
under section 23(2) and compute the Annual Value at NIL. The Appellant therefore prays that
the entire addition of Rs.8,60,445/- be deleted.
3. The assessee in an individual and well renowned cricketer earning his income from playing
cricket, modeling and endorsements. The assessee had filed the return of income for the
assessment year 2012-13 on 28.09.2012 declaring an income of Rs.61,23,14,400/-. In the
assessment order passed u/s.143(3), the Assessing Officer inter alia made an addition of
Rs.8,60,445/- under the head income from house property.
4. Brief facts of the case on this issue are that the assessee owns two properties in Pune, i.e., flat
at Saphire Park and flat in Treasure park costing Rs.60,60,000/- and Rs.82,80,750/- respectively.
The property situated in Treasure Park was let out for 9 months @ Rs.15,000/- per month. The
Assessing Officer accepted the annual value @ Rs.15,000/- totalling to Rs.1,35,000/- and
computed income from house property of other flat. However, the assessee has shown the
property situated at Sapphire Park as vacant for the whole year for the reason that the assessee
could not find a suitable tenant. The assessee claimed vacancy allowance u/s.23(1)(c) and
declared income in respect of the flat situated at Sapphire Park as Nil. The Assessing Officer
during the course of the assessment proceedings asked the assessee to give reasons for not
charging the rental income in respect of the flat at Sapphire Park since no rent was offered to tax
on that flat. The assessee argued that it could not find a suitable tenant for that fiat although he
was desirous of letting out the same on rent and had calculated the annual value as nil by
claiming vacancy allowances. The assessee had also argued that the deemed annual value based
on the realizable rent in respect of flat at Sapphire Park could be Rs.1,35,000/-without prejudice
to the argument that the annual value is required to be taken as nil.
5. The Assessing Officer rejected the assessee's explanation by commenting that the income
offered alternatively by the assessee is too low and estimated the rental income @ 6% of the
value of both the fiats aggregating to Rs.1,43,40,750/- (Rs.82,80,750 + 60,60,000) as deemed
rental income. Though the Assessing Officer had discussed regarding the house property income
in respect of Sapphire Park on which no rental income was offered, however, while making
addition the Assessing Officer has taken value of both the flats at Sapphire Park as well as
Treasure Park. Therefore, he held that the decision of the Assessing Officer to charge rental
income from the flat at Sapphire Park is a reasonable and correct decision.
6. Before the ld. Commissioner of Income Tax (Appeals), the assessee argued that he had made
efforts for letting out of flat at Sapphire Park. The assessee submitted the copies of letters written
to builder requesting him to identify tenants for the flat at Sapphire Park. The ld. Commissioner
of Income Tax (Appeals) observed that these are copies of purported letters written on plain
paper. That there are no evidences for dispatch of these letters as well as receipt of these letters
by the builder. That the assessee has not submitted any copy of any response from the builder to
these letters. Hence, the ld. Commissioner of Income Tax (Appeals) held that in absence of the
supporting evidence of dispatching of the letters, receipt of the letters by the builder and replies
from the builder, these are treated as insufficient evidences to support the assessee's claim. He
held that any prudent person desirous of letting out house property will approach various real
estate agents available in the market instead of simply writing few letters to the builder.
Therefore, the ld. Commissioner of Income Tax (Appeals) held that the Assessing Officer's
action to charge rental income from the flat at Sapphire Park is a reasonable. Thereafter, the ld.
Commissioner of Income Tax (Appeals) distinguished the case laws referred by the assessee.
These case laws were as under:
Premsudha Exports(P) Ltd. v. Asstt. CIT [2008] 110 ITD 158 (Mum.); Kamal
Mishra v. ITO [2008] 19 SOT 251 (Delhi) and Asstt. CIT v. Dr.Prabha Sanghi [2012]
27 taxmann.Com 317/139 ITD 504 (Delhi)
7. However, the ld. Commissioner of Income Tax (Appeals) granted some relief to the assessee
by holding that as per the information available on the website by namewww.magicbricks.com,
the probable rate for Sapphire Park should be Rs.15,000/- per month. Accordingly, he directed
the Assessing Officer to restrict deemed rental income from the flat at Sapphire Park to
Rs.1,26,000/- instead of Rs.8,60,445/- computed by the Assessing Officer.
8. Against this order, the assessee is in appeal before us.
9. We have heard both the counsels and perused the records. The ld. Counsel of the assessee
submitted that the assessee has been unable to let out the property for the concerned period.
Hence, he claimed that the assessee is duly entitled to deduction u/s.23(1)(c). In this regard, he
submitted the copies of 3 letters written by the assessee to the builders. First letter was dated
15.05.2011 in which the assessee thanked the builder for identifying the tenant for the flat at
Treasure Park but also requested to identify tenant for another flat in builder's project at Sapphire
Park. Subsequently, the assessee has further written letter dated 18.08.2011 and 04.12.2011
being reminders for identifying the tenant to let out flat at Sapphire Park. The ld. Counsel of the
assessee further placed reliance upon the following case law:
Premsudha Exports (P.) Ltd. (supra)
10. Per contra, the ld. Departmental Representative relied upon the orders of the authorities
below.
11. Upon careful consideration, we find that it will be apposite to refer to the relevant provision
of section 23 in this regard which reads as under:
Annual value how determined.
23. (1) For the purposes of section 22, the annual value of any property shall be deemed
to be—
the 57sum for which the property might reasonably be expected to let from year
(a)
to year; or
where the property or any part of the property is let 57 and the actual
(b) rent57 received or receivable57 by the owner in respect thereof is in excess of
the sum referred to in clause (a), the amount so received or receivable; or
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
(c)
rent received or receivable by the owner in respect thereof is less than the sum
referred to in clause (a), the amount so received or receivable :
12. From the above provision of law, it can be construed that in case the property or part thereof
was vacant during the period, the proportion deduction should be allowed from the sum on which
the property might reasonably be let out from year to year. We find that it is the plea of the
assessee that the assessee had made reasonable effort by requesting the builder to identify the
tenants for the concerned flat. Since appropriate tenant could not be find out, the flat remained
vacant. Hence, the assessee has claimed benefit of section 23(1)(c) which duly permits deduction
in this regard. We find that the ITAT in the case of Premsudha Exports (P) Ltd. (supra) had the
occasion to deliberate on the identical issue. The tribunal had expounded as under:
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 sub-section (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 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]
13. Now we examine the present case on the touch stone of the provision of section 23(1)(c) of
the Income-tax Act, 1961 and the case law as afore-said. We find that the assessee has claimed
that the said flat had remained vacant throughout the year despite assessee's reasonable effort to
let out the same. That the assessee had requested the builder to identify the tenants. In this
regard, the assessee has submitted three letters written to the builder. It may be noted that as
emanating from the records and the letter, the same builder had identified the tenant for another
flat of the assessee which was let out and whose rent has been offered and accepted for taxation.
In this factual scenario, the authorities below have doubted the veracity of these letters and
doubted the credentials of the assessee's claim. In our considered opinion, this does not display
application of mind to the facts of the case. The assessee is a well renowned cricketer. He is
furnishing the return of income of Rs.61,23,14,400/-. The let out value of the property in dispute
is assessed as only Rs.1,26,000/- by the ld. Commissioner of Income Tax (Appeals) as rent for
the whole year. When the same builder has helped the assessee to find tenant for another flat,
why his letters to the same builder to help him identify one more tenant, can be considered as
fake, defies logic. That the assessee should maintain a dispatch register for his letters as expected
by the authorities below, is also abnormal expectation. That the assessee should get stamped
receipt from the builder for the receipt of his letters, is equally quixotic proposition. In these
circumstances, the insinuation that the assessee has submitted bogus and fake documents to
support the case that reasonable efforts were made to find out a tenant for the vacant flat, is not
sustainable in law. The expectation that despite his unarguably busy professional engagements
commanding huge amount of money Shri Sachin Tendulkar should have embarked upon and
displayed a more robust and exuberant expedition to find a tenant for his vacant flat by
approaching other real estate brokers and keeping an infallible record thereof, is beyond normal
conception. Hence, we have no hesitation in setting aside the orders of the authorities below and
deleting the addition. Hence, we decide the issue in favour of the assessee.
14. In the result, the appeal by the assessee stands allowed.
SUNIL

*In favour of assessee.

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Thanking You & With best regards,

Bhupendra Shah
02223007738
 Deputy Commissioner of Income-tax,-23(3) Mumbai*
SHAMIM YAHYA, ACCOUNTANT MEMBER
AND SANDEEP GOSAIN, JUDICIAL MEMBER
IT APPEAL NO. 3755 (MUM.) OF 2016
[ASSESSMENT YEAR 2012-13]
AUGUST 10, 2018

Section 23 of the Income-tax Act, 1961 - Income from house property - Annual
value (Vacancy allowance) - Assessment year 2012-13 - Whether where assessee
owned a house property which remained vacant throughout relevant year as he
could not find a suitable tenant despite writing various letters to concerned
builder, he was eligible to claim vacancy allowance under section 23(1)(c) and,
thus, rental income from said property was rightly declared at nil - Held, yes [Para
13] [In favour of assessee]
FACTS

The assessee owned a house property which remained vacant for the whole
year for the reason that the assessee could not find a suitable tenant. The
■
assessee claimed vacancy allowance under section 23(1)(c) and declared
income in respect of the said flat at Nil.
■ The Commissioner (Appeals) confirmed said addition.
■ On second appeal:
HELD

The assessee submitted that he has been unable to let out the property for the
concerned period. Hence, he is duly entitled to deduction under section
■
23(1)(c). In this regard, he submitted the copies of 3 letters written to the
builders. [Para 9]
From the provisions of section 23(1), it can be construed that in case the
property or part thereof was vacant during the period, the proportion deduction
should be allowed from the sum on which the property might reasonably be let
out from year to year. It is the plea of the assessee that he had made
■
reasonable effort by requesting the builder to identify the tenants for the
concerned flat. Since appropriate tenant could not be find out, the flat remained
vacant. Hence, the assessee has claimed benefit of section 23(1)(c) which duly
permits deduction in this regard. [Para 12]
The assessee has claimed that the said flat had remained vacant throughout
■
the year despite assessee's reasonable effort to let out the same. That the
 assessee had requested the builder to identify the tenants. In this regard, the
assessee has submitted three letters written to the builder. It may be noted that
as emanating from the records and the letter, the same builder had identified
the tenant for another flat of the assessee which was let out and whose rent has
been offered and accepted for taxation. In this factual scenario, the authorities
below have doubted the veracity of these letters and doubted the credentials of
the assessee's claim. This does not display application of mind to the facts of
the case. The assessee is a well renowned cricketer. He is furnishing the return
of income of Rs. 61,23,14,400. The let out value of the property in dispute is
assessed as only Rs. 1,26,000 by the Commissioner (Appeals) as rent for the
whole year. When the same builder has helped the assessee to find tenant for
another flat, why his letters to the same builder to help him identify one more
tenant, can be considered as fake, defies logic. That the assessee should
maintain a dispatch register for his letters as expected by the authorities below,
is also abnormal expectation. That the assessee should get stamped receipt
from the builder for the receipt of his letters, is equally quixotic proposition. In
these circumstances, the insinuation that the assessee has submitted bogus
and fake documents to support the case that reasonable efforts were made to
find out a tenant for the vacant flat, is not sustainable in law. The expectation
that despite his unarguably busy professional engagements commanding huge
amount of money assessee should have embarked upon and displayed a more
robust and exuberant expedition to find a tenant for his vacant flat by
approaching other real estate brokers and keeping an infallible record thereof,
is beyond normal conception. Hence, there is no hesitation in setting aside the
orders of the authorities below and deleting the addition. [Para 13]
■ In the result, the appeal by the assessee stands allowed. [Para 14]
CASES REFERRED TO

Premsudha Exports (P.) Ltd. v. Asstt. CIT [2008] 110 ITD 158 (Mum.) (para 6), Kamal
Mishra v. ITO [2008] 19 SOT 251 (Delhi) (para 6) and Asstt. CIT v. Dr. Prabha Sanghi [2012]
27 taxmann.com 317/139 ITD 504 (Delhi) (para 6).
Pankaj Jain for the Appellant. V. Vidhyadhar for the Respondent.
ORDER

Shamim Yahya, Accountant Member - This appeal by the assessee is directed against the
order of the Commissioner of Income Tax (Appeals)-34, Mumbai dated 15.03.2016 and pertains
to the assessment year 2012-13.
2. The grounds of appeal read as under:
The Commissioner of Income Tax (Appeals)-34, Mumbai [hereinafter referred to as the CIT (A)]
erred in arriving at the deemed rental income in respect of the vacant flat situated at Sapphire
Park, Balewadi, Pune @ Rs.15,000 per month and computing the Annual Rent Receivable for
the said flat at Rs.1,80,000/- and confirming the addition made by the AO on deemed rental
income for the said flat at Rs.1,26,000/- as against Rs.8,60,445/- made by him.
The Appellant submits that since the property has not been let out and the Appellant has not
derived any benefit therefrom during the year the AO ought to have granted vacancy allowance
under section 23(2) and compute the Annual Value at NIL. The Appellant therefore prays that
the entire addition of Rs.8,60,445/- be deleted.
3. The assessee in an individual and well renowned cricketer earning his income from playing
cricket, modeling and endorsements. The assessee had filed the return of income for the
assessment year 2012-13 on 28.09.2012 declaring an income of Rs.61,23,14,400/-. In the
assessment order passed u/s.143(3), the Assessing Officer inter alia made an addition of
Rs.8,60,445/- under the head income from house property.
4. Brief facts of the case on this issue are that the assessee owns two properties in Pune, i.e., flat
at Saphire Park and flat in Treasure park costing Rs.60,60,000/- and Rs.82,80,750/- respectively.
The property situated in Treasure Park was let out for 9 months @ Rs.15,000/- per month. The
Assessing Officer accepted the annual value @ Rs.15,000/- totalling to Rs.1,35,000/- and
computed income from house property of other flat. However, the assessee has shown the
property situated at Sapphire Park as vacant for the whole year for the reason that the assessee
could not find a suitable tenant. The assessee claimed vacancy allowance u/s.23(1)(c) and
declared income in respect of the flat situated at Sapphire Park as Nil. The Assessing Officer
during the course of the assessment proceedings asked the assessee to give reasons for not
charging the rental income in respect of the flat at Sapphire Park since no rent was offered to tax
on that flat. The assessee argued that it could not find a suitable tenant for that fiat although he
was desirous of letting out the same on rent and had calculated the annual value as nil by
claiming vacancy allowances. The assessee had also argued that the deemed annual value based
on the realizable rent in respect of flat at Sapphire Park could be Rs.1,35,000/-without prejudice
to the argument that the annual value is required to be taken as nil.
5. The Assessing Officer rejected the assessee's explanation by commenting that the income
offered alternatively by the assessee is too low and estimated the rental income @ 6% of the
value of both the fiats aggregating to Rs.1,43,40,750/- (Rs.82,80,750 + 60,60,000) as deemed
rental income. Though the Assessing Officer had discussed regarding the house property income
in respect of Sapphire Park on which no rental income was offered, however, while making
addition the Assessing Officer has taken value of both the flats at Sapphire Park as well as
Treasure Park. Therefore, he held that the decision of the Assessing Officer to charge rental
income from the flat at Sapphire Park is a reasonable and correct decision.
6. Before the ld. Commissioner of Income Tax (Appeals), the assessee argued that he had made
efforts for letting out of flat at Sapphire Park. The assessee submitted the copies of letters written
to builder requesting him to identify tenants for the flat at Sapphire Park. The ld. Commissioner
of Income Tax (Appeals) observed that these are copies of purported letters written on plain
paper. That there are no evidences for dispatch of these letters as well as receipt of these letters
by the builder. That the assessee has not submitted any copy of any response from the builder to
these letters. Hence, the ld. Commissioner of Income Tax (Appeals) held that in absence of the
supporting evidence of dispatching of the letters, receipt of the letters by the builder and replies
from the builder, these are treated as insufficient evidences to support the assessee's claim. He
held that any prudent person desirous of letting out house property will approach various real
estate agents available in the market instead of simply writing few letters to the builder.
Therefore, the ld. Commissioner of Income Tax (Appeals) held that the Assessing Officer's
action to charge rental income from the flat at Sapphire Park is a reasonable. Thereafter, the ld.
Commissioner of Income Tax (Appeals) distinguished the case laws referred by the assessee.
These case laws were as under:
Premsudha Exports(P) Ltd. v. Asstt. CIT [2008] 110 ITD 158 (Mum.); Kamal
Mishra v. ITO [2008] 19 SOT 251 (Delhi) and Asstt. CIT v. Dr.Prabha Sanghi [2012]
27 taxmann.Com 317/139 ITD 504 (Delhi)
7. However, the ld. Commissioner of Income Tax (Appeals) granted some relief to the assessee
by holding that as per the information available on the website by namewww.magicbricks.com,
the probable rate for Sapphire Park should be Rs.15,000/- per month. Accordingly, he directed
the Assessing Officer to restrict deemed rental income from the flat at Sapphire Park to
Rs.1,26,000/- instead of Rs.8,60,445/- computed by the Assessing Officer.
8. Against this order, the assessee is in appeal before us.
9. We have heard both the counsels and perused the records. The ld. Counsel of the assessee
submitted that the assessee has been unable to let out the property for the concerned period.
Hence, he claimed that the assessee is duly entitled to deduction u/s.23(1)(c). In this regard, he
submitted the copies of 3 letters written by the assessee to the builders. First letter was dated
15.05.2011 in which the assessee thanked the builder for identifying the tenant for the flat at
Treasure Park but also requested to identify tenant for another flat in builder's project at Sapphire
Park. Subsequently, the assessee has further written letter dated 18.08.2011 and 04.12.2011
being reminders for identifying the tenant to let out flat at Sapphire Park. The ld. Counsel of the
assessee further placed reliance upon the following case law:
Premsudha Exports (P.) Ltd. (supra)
10. Per contra, the ld. Departmental Representative relied upon the orders of the authorities
below.
11. Upon careful consideration, we find that it will be apposite to refer to the relevant provision
of section 23 in this regard which reads as under:
Annual value how determined.
23. (1) For the purposes of section 22, the annual value of any property shall be deemed
to be—
the 57sum for which the property might reasonably be expected to let from year
(a)
to year; or
where the property or any part of the property is let 57 and the actual
(b) rent57 received or receivable57 by the owner in respect thereof is in excess of
the sum referred to in clause (a), the amount so received or receivable; or
where the property or any part of the property is let and was vacant during the
(c) whole or any part of the previous year and owing to such vacancy the actual
rent received or receivable by the owner in respect thereof is less than the sum
 referred to in clause (a), the amount so received or receivable :
12. From the above provision of law, it can be construed that in case the property or part thereof
was vacant during the period, the proportion deduction should be allowed from the sum on which
the property might reasonably be let out from year to year. We find that it is the plea of the
assessee that the assessee had made reasonable effort by requesting the builder to identify the
tenants for the concerned flat. Since appropriate tenant could not be find out, the flat remained
vacant. Hence, the assessee has claimed benefit of section 23(1)(c) which duly permits deduction
in this regard. We find that the ITAT in the case of Premsudha Exports (P) Ltd. (supra) had the
occasion to deliberate on the identical issue. The tribunal had expounded as under:
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 sub-section (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 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]
13. Now we examine the present case on the touch stone of the provision of section 23(1)(c) of
the Income-tax Act, 1961 and the case law as afore-said. We find that the assessee has claimed
that the said flat had remained vacant throughout the year despite assessee's reasonable effort to
let out the same. That the assessee had requested the builder to identify the tenants. In this
regard, the assessee has submitted three letters written to the builder. It may be noted that as
emanating from the records and the letter, the same builder had identified the tenant for another
flat of the assessee which was let out and whose rent has been offered and accepted for taxation.
In this factual scenario, the authorities below have doubted the veracity of these letters and
doubted the credentials of the assessee's claim. In our considered opinion, this does not display
application of mind to the facts of the case. The assessee is a well renowned cricketer. He is
furnishing the return of income of Rs.61,23,14,400/-. The let out value of the property in dispute
is assessed as only Rs.1,26,000/- by the ld. Commissioner of Income Tax (Appeals) as rent for
the whole year. When the same builder has helped the assessee to find tenant for another flat,
why his letters to the same builder to help him identify one more tenant, can be considered as
 fake, defies logic. That the assessee should maintain a dispatch register for his letters as expected
by the authorities below, is also abnormal expectation. That the assessee should get stamped
receipt from the builder for the receipt of his letters, is equally quixotic proposition. In these
circumstances, the insinuation that the assessee has submitted bogus and fake documents to
support the case that reasonable efforts were made to find out a tenant for the vacant flat, is not
sustainable in law. The expectation that despite his unarguably busy professional engagements
commanding huge amount of money Shri Sachin Tendulkar should have embarked upon and
displayed a more robust and exuberant expedition to find a tenant for his vacant flat by
approaching other real estate brokers and keeping an infallible record thereof, is beyond normal
conception. Hence, we have no hesitation in setting aside the orders of the authorities below and
deleting the addition. Hence, we decide the issue in favour of the assessee.
14. In the result, the appeal by the assessee stands allowed.
SUNIL

*In favour of assessee.

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To: palairaj@gmail.com
Subject: Re: STCG vs Business income

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