WHETHER RETURN ON COST OF PROPERTY CAN BE CONSIDERED FOR CALCULATING ANNUAL VALUE U/S 23(1)(a)?

Respected Members

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Short note of today's case law for quick reference:

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[2024] 118 ITR (Trib) 726 (ITAT[Mum])

[BEFORE THE INCOME-TAX APPELLATE TRIBUNAL — MUMBAI "C" BENCH]

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MS. PRIYA MOHAN GURNANI

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DEPUTY COMMISSIONER OF INCOME-TAX

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1. The properties were not let out, and therefore the provisions of section 23(1)(b) and (c) did not apply.

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2. The case of the assessee fell under section 23(1)(a).

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3. Therefore, the annual value of the property would be the sum for which the property reasonably be expected to let from year to year.

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4. The assessee had not made any attempt to justify what was the sum for which the property might reasonably be expected to be let from year to year.

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5. Therefore, it was for the A.O. to estimate the income.

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6. It could not be said that the return on the acquisition cost of the property could not be considered as a return on such property and it was not fair method.

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7. Therefore, there was no infirmity in the order of the authorities in assuming 5% of the cost of the investment as the annual value of the property which could be taxed u/s 23(1) of the Act under the head Income from house property.

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8. Deduction of municipal taxes inbuilt in estimate.

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9. That the properties were not let out during the whole of the year and therefore there was no question of granting any vacancy allowance.

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10. That the deduction of 30% available u/s 24(a) of the Act was unqualified and the assessee was eligible therefor.

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11. For transfer from one officer to another in same city by order of Principal Commissioner, there is no requirement of giving assessee opportunity of being heard before transfer u/s 127(3).

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12. There is no requirement to issue fresh notice u/s 143(2) on change of incumbent of office.