Law: Income Tax Act, 1961

Section: 24

Income-tax--Property---Deduction---Unrealised rent ---Institution of legal proceedings against tenant is sufficient---No obligation on assessee to prove decrees Notice to tenant to vacate in March, 1972---Suit instituted during previous year relevant to assessment year 1975-76---Deduction allowable only in assessment wear 1975-76---Indian Income Tax Act, 1961, S. 24---Indian Income tax year 1962, R. 4. Rule 4 of the Income-tax Rules, 1962, says that to claim deduction in respect add unrealised rent, either the defaulting tenant should have vacated or steps should have been taken to compel the tenant to vacate the property. The first part of the rule requiring that the assessee must take necessary steps to institute legal proceedings for recovery of arrears before he claims deduction would be rendered otiose if it were taken that tiling or institution of legal proceedings would itself disentitle the assessee to urge that tire arrears have become unrealisable. Institution of legal proceedings cannot be equated to termination of legal proceedings. Institution of legal proceedings denotes mere v commencement and not its culmination. The emphasis is that before laying claim the assessee must make reasonable efforts to recover the rent and lie must establish that he made such efforts and failure of such effort in yielding results until tie claim is made should lead to a reasonable conclusion that the estimation of the assessee about irrecoverability of the rent is plausible. No further condition can be read into the rules to enjoin an obligation upon the assessee to prove a decree for vacation. In the computation of income from house property the assessee claimed deductions in respect of unrealised rent. Both the Income-tax Officer and the Tribunal rejected tire assessee's claim. The Tribunal found that the assessee had issued notice to revoke the licence and for terminating the tenancy in March, 1972 and a fruit had been filed for recovery of arrears in December, 1973. The Tribunal held that it could not be said that the arrears of rent could not be realised or had become irrecoverable at the time the legal proceedings were started and hence disallowed the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492