ITAT, MUMBAI BENCH ‘E’ : MUMBAI Determination of ALV of a self-occupied property

Determination of ALV of a self-occupied property



Merely because the assessee has entered jointly with two separate agreements to purchase a duplex flat having two separate numbers does not mean that they are two residential units



ITAT, MUMBAI BENCH ‘E’ : MUMBAI

Suresh C. Sadarangani

v.

ACIT

ITA No. 953/Mum/08

August 27, 2009

RELEVANT EXTRACTS:

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10. The relevant provisions of section 23(2),(3) and (4) read as under:

Annual value how determined.

23(1) … …. .....

(a) …. .… ….

(b) …. …. ….

(c) …. …. ….

Provision …. ….

Explanation …. …..

(2) Where the property consists of a house or part of a house which ----

(a) is in the occupation of the owner for the purpose of his own residence; or

(b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other place, he has to reside at that other place in a building not belonging to him, the annual value of such house or part of the house shall be taken to be nil.

(3) The provisions of sub-section (2) shall not apply if -------

(a) the house or part of the house is actually let during the whole or any part of the previous year; or

(b) any other benefit therefrom is derived by the owner.

(4) Where the property referred to in sub-section (2) consists of more than one house –

(a) The provisions of that sub-section shall apply only in respect of one of such houses, which the assessee may, at his option, specify in this behalf;

(b) The annual value of the house or houses, other than the house in respect of which the assessee has exercised an option under clause (a), shall be determined under sub-section (1) as if such house or houses has been let.

11. A perusal of the above provisions show that the word ‘property’ has been used by the legislature in a wider sense so as to include more than one house. However, the right to compute the ALV at nil in respect of self occupied property is restricted to one house even thought he property owned by the assessee may consist of more than one house. Section 23(2)(a) permits the assessee to compute the ALC of self occupied property at Nil provided (i) the property must be in the occupation of the owner, (ii) the occupation of the owner must be for the purpose of his own residence (iii) it is not let during any part of the accounting year and (iv) no other benefit therefrom is derived by the owner. However, section 23(4)(a) clearly reveals that where the property owned by the assessee consists of more than one house, then the owner is entitled to the benefit of clause 23(2) in respect of one such residential house, to be chosen by him. Section 23(4)(b) provides that annual value of the house or houses other than the house in respect of which the assessee has exercised an option under clause(a) shall be determined under sub-section (1)as if such house or house had been let.

17. Applying he above provisions in the light of the ratio of the above decisions to the facts of the present case we are of the view that as per floor plan of the property a duplex flat No. 18B and 19B, one above the other and connected with internal staircase having one kitchen was jointly purchased by the assessee and his wife having equal ownership, and was occupied by assessee and his wife a single duplex flat for self occupation and also assessed by the society as one owner of the flats and was not let out during the year, hence, the house falls under the provisions of section 23(2)(a) of the Act. merely because the assessee has entered jointly with two separate agreements to purchase the above duplex flat having two separate numbers does not mean that they are two residential units. Accordingly the value of the property is liable to be taken at Nil. In this view of the matter the addition of Rs. 5,15,274/- made by the Assessing Officer and sustained by the Id. CIT(A) is deleted. The ground taken by the assessee is, therefore, allowed.

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