Shri Radhey Construction Pvt. Ltd., B-7-A, Shiv Marg, Bani Park,Jaipur v. Principal Commissioner Of Income Tax-I, New Central Revenuebuilding, Department Of Income Tax, Statue Circle, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 248 / 2017 Shri Radhey Construction Pvt. Ltd., B-7-A, Shiv Marg, Bani Park,Jaipur ----Appellant Versus Principal Commissioner of Income Tax-I, New Central RevenueBuilding, Department of Income Tax, Statue Circle, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. S.L. Poddar for Mr. N.L. Agarwal For Respondent(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS 12/12/2017 Order 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeal for statistical purpose. 2.This Court while admitting the appeal on 09.10.2017framed following substantial questions of law: “1. Whether the ld. ITAT was justified under lawto held the Assessee liable to pay income tax onthe annual letting value of the unsold flatsowned by it under the head income from houseproperty ignoring the fact that the Hon’bleSupreme Court of India has granted SLP in AnsalHousing and Constructions Ld. Vs. CIT againstCIT vs. Ansal Housing and Constructions decidedby Hon’ble Delhi High Court on the similarquestion of law? 2. Whether the ld. ITAT was justified under lawwhile ignoring the instructions issued by theCBDT vide circular no. 14 of 2001 dated 22.11.2001 in para 29.2 & 29.3, which arebinding on the departmental officers andwherein it has been clarified that the unrealizedrent shall not be included in the actual rentreceivable and therefore shall not form part ofthe annual value?” 3.On the first issue, we make it clear that the decision ofthe Tribunal will be subject to the SLP which is pending before theSupreme Court. If the SLP is decided in favour of the assessee itwill be open for the assessee to take benefits pursuant to thedecision. The issue is answered in favour of assessee subject toSLP otherwise the order of the Tribunal is not disturbed. 4.On the second issue, counsel for the appellant hastaken us to the conditions which reads as under: “3. Board circular is in favour of theassessee The board has issued explanatory notes on theamendments carried out by Finance act, 2001.The provisions of section 23 were amended bythe Finance Act 2001. The board has issued thefollowing clarification under Circular No. 014 of2001 Dt. 22nd November, 2001 which goes infavour of the assessee. Circular No. 014 of 2001 DT. 22nd November,2001Subject Finance Act, 2001-ExplanatoryNotes on provisions relating to Direct Taxes Dated 22/11/2001 "29.2 The substituted section 23 retains theexisting concept of annual value as being thesum for which the property might reasonably beexpected to let from year to year i.e., annualletting value (ALV). However, in case of let outproperty, the concept of "annual rent", has beenremoved. The new section provided that wherethe property or any part of the property is letand the actual rent received or receivable is inexcess of the ALV, the amount so received orreceivable shall be the annual value. This will be the case even if the property (or part of theproperty) was vacant for a part of the year, butthe actual rent received or receivable during theyear is still higher than the ALV. Where theproperty or any part of the property is let andwas vacant during the whole or any part of theprevious year and owning to such vacancy, theactual rent received or receivable is less thanthe ALV, the sum so received or receivable shallbe the annual value. In case the actual rentreceived or receivable during the year is lessthan the ALV, but not because of vacancy, it isthe ALV which shall be taken to be the annualvalue." the case even if the property (or part of theproperty) was vacant for a part of the year, butthe actual rent received or receivable during theyear is still higher than the ALV. Where theproperty or any part of the property is let andwas vacant during the whole or any part of theprevious year and owning to such vacancy, theactual rent received or receivable is less thanthe ALV, the sum so received or receivable shallbe the annual value. In case the actual rentreceived or receivable during the year is lessthan the ALV, but not because of vacancy, it isthe ALV which shall be taken to be the annualvalue." The above para of the circular very clearly statethat where the property or any part of theproperty is let and was vacant during the wholeor any part of the previous year and owing tosuch vacancy, the actual rent received orreceivable is less than the ALV, the sum soreceive or receivable shall be the annual value.The circular issue by the board are of bindingnature particular those which given relief to theassessee which is so held by the Hon'bleSupreme Court in the following case:- 5. UCO Bank vs. CIT (1999)237 ITR 889 CBDT Circulars-Binding nature- Relaxation oflaw- CBDT has power, inter alia, to tone downthe rigour of the law and ensure fairenforcement of its provisions by issuingcirculars- Circulars contemplated in s. 119(2) (a)cannot be adverse to the assessee- power isgiven for the purpose of just, proper andefficient management of work of assessment-Circular, however, are not meant forcontradicting or nullifying any provision of thestatute- they are meant to mitigate the rigour ofapplication of a particular provision-So long assuch a circular is in force it would be binding onthe Departmental authorities in view of theprovision of s. 119 to ensure a uniform andproper administration and application of the ITAct.” Taking into consideration the view taken by the Tribunal that the property which is situated is different property, thereforecontention raised by the counsel for appellant is not required tobe accepted. 6.Second issue is answered in favour of department and against the assessee. 7.The appeal stands partly allowed. (VIJAY KUMAR VYAS) J. (K.S. JHAVERI)J. Chouhan/31