Law:

Section:

section 23(1) of the income-tax act, 1961-income from house property-annual value-assessee completed six residential units up to second floor by financial year 1968-69 and also completed third floor meant for self-occupation by financial year 1972-73-whether for computing relief under, section 23(1), second proviso (b), date of completion of entire building was relevant, and not date of completion of each residential unit-held, yes-whether assessee entitled to impugned relief for assessment year 1974-75 only for let-out portion and not for self-occupied portion-held, on facts, yes Facts The assessee had completed six residential units on the first and second floor of a building by the financial year 1968-69. These were partly let out and partly self-occupied. He completed the third floor in the financial year 1972-73 for self-occupation, whereupon the entire first and second floors were let out. In his assessment for the assessment year 1974-75, the assessee claimed deduction under the second proviso (b) to section 23(1) in respect of six residential units let out as well as for the self-occupied third floor. The ITO disallowed the same, observing (i) that since the deduction was allowable for each residential unit in the building, it was the completion of each residential unit that had to be considered and not the completion of the building as a whole ; and (ii ) that the deduction qua six residential units completed by the financial year 1968-69, was admissible only for three years, i.e., up to the assessment year 1971-72 and could not thus be allowed in the instant assessment year ; and (iii) that since the completion of the third floor was merely an extension of the existing completed building of six residential units and was self-occupied, the deduction was not allowable. The ITO's order was confirmed by the AAC and the Tribunal. On reference : Held The second proviso to section 23( 1) uses the expressions 'building' and residential unit', neither of which is defined in the Act. Therefore, in construing these provisions one must give meaning to these expressions in the ordinary sense. The building should certainly be one which is habitable and complete and…

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