Sandeep Singla vs Income Tax Officer

PER MANISH AGARWAL, AM:

The present appeal is filed by the Assessee against the order of Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [‘Ld. CIT(A)’ in short] in Appeal No. NFAC-2017-18/10037753 arising out of assessment order passed u/s 143(3) r.w.s. 143(3A) & 143(3B) of the Income Tax Act, 1961 (‘the Act’) dated 23.03. 2021 for Assessment Year: 2018-19.

Brief facts of the case are that the assessee has filed its return of income on 31.08.2019 declaring total income of Rs.1,07,47,730/-. The assessee engaged in the business of “Wholesale and Retail Sales of textiles, apparel, footwear, leather good” etc. The case of the assessee was selected for limited scrutiny for the reason “Income from House Property”. The AO observed that the assessee owned six properties which are claimed as self-occupied out of which assessee has shown House No.576, Sector 15, Gurugram and H. No.24, Housing Board, Gurugram as self-occupied during the year under consideration. The assessee is living in House No.23, Housing Board Colony, Gurugram. The AO treated one property as self-occupied and made the additions for the remaining properties as deemed rental income based on the Anual Lettable Value (ALV).

In first appeal, assessee claimed that the house No.23, Housing Board Colony is owned by his brother and House No.24, Housing Board Colony is having total area of only 120 Sq. yds and very old construction and is used by elder son for his residence as it cannot accommodate the entire family thus the assessee is living in separate house. He thus prayed that if the said house is also treated as self-occupied, no addition could be made with respect to notional rent for the other house property. However, the Ld. CIT(A) has not accepted the contention of the assessee and confirmed the addition made by the AO by observing that only one house could be taken as self-occupied.

Aggrieved by the said order, the assessee is in appeal before the Tribunal wherein all the grounds of appeal are with respect to the addition of Rs.7,20,000/- made on account of notional rent of the house property situated at 576, Sector 15, Gurugram.

Heard the parties and perused the materials available on record. The claim of the assessee was that House No.576, Sector-15, Gurugram, which was used by the assessee for his own residence as the house property at Housing Board Colony was small and not sufficient for the whole family and thus the same was occupied by his son. The Revenue alleged that only one house could be held as self -occupied, however, the fact remains that this property is also occupied for residence by the assessee himself and his son is residing which fact has not been doubted by the lower authorities. Once the property is in use by the assessee for residential purposes, the same could be held as a vacant property, of which the ALV could be taken as notional rent. Considering these facts, we are of the considered view that the AO has wrongly made the additions for the house property which is under self-use by the family members of the assessee for residential purposes and, therefore, the same is held as self-occupied property. Accordingly, the addition made towards notional rent by treating the same as vacant property is hereby deleted. All the grounds of appeal of the assessee are allowed.

In the result, the appeal filed by the assessee is allowed.