Law:

Section:

Section 23 of the Income-tax Act, 1961 - Income from house property - Annual value - Assessment year 2002-03 - Whether under section 23(1)(c), period for which a let out property may remain vacant cannot exceed period for which property has been let out - Held, yes - Whether where property has not been let out at all during previous year under consideration, there is no question of any vacancy allowance being provided thereto under section 23(1)(c) - Held, yes - Whether words in section 23(1)(c) 'where the property is let' cannot be read as 'where the property is intended to be let' - Held, yes [In favour of revenue] Words and Phrases : 'Where the property is let' as occurring in section 23(1)(c) of the Income-tax Act, 1961. FACTS For relevant assessment year, the assessee filed his return of income declaring certain income. During assessment proceedings, the Assessing Officer sought to include annual value in respect of a flat in the computation of the assessee's income from house property. The assessee contended that as per section 23(1)(c), the annual value of the flat was nil and, hence, he was not liable to tax. The assessing authority held that section 23(1)(c) would apply only when the property was let out and since property in question was not let out during the accounting year, the question of allowing any deduction on account of vacancy would not arise. On appeal, the Commissioner (Appeals) upheld the order of the Assessing Officer. On second appeal, the Tribunal concluded that in cases where the property had not been let out at all during the year under consideration, there was no question of any vacancy allowance as provided in section 23(1)(c) and, hence, the order of the Commissioner (Appeals) determining the annual let out value of the property was upheld. On appeal to the High Court: HELD While interpreting a statute, the Court may not only take into consideration the purpose for which it had been enacted, but also the mischief it seeks to suppress. It is evident that clause (c ) of section 23(1) has been inserted as a protection to the assessee in cases where, on account of vacancy, the rent received or receivable on a property which has been…

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