COMMISSIONER OF INCOME TAX Vs. DHUN D DALAL

JUDGEMENT

(1.) AT the instance of the Department, the Tribunal referred the following two questions for the opinion of this Court under S. 256(1) of the IT Act, 1961, hereinafter referred to as the 'Act' :

(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal's view that the assessee is entitled to vacancy allowance when the property was not actually let out and was not in the occupation of the tenant is sustainable in law ?"

(3.) ACCORDING to the Tribunal the property was not occupied by the tenant. But from the point of view of the owner of the property, the property was vacant. It remains to be seen that the property was not let out to the intending purchaser. There was an agreement to sell the property in question even though the agreement fell through subsequently. During the period under consideration, the property was under the occupation of the agreement holder. The owner of the property received the advance and the sale consideration was fixed in the sale agreement. In such circumstances, it cannot be said that the property was let out to the agreement holder. When there is no relationship of landlord and tenant between the agreement holder and the owner of the property, it cannot be said that the property was let out to such a person. When the property was not actually let out and when the property has remained without payment of any rent, the provisions of S. 24(1)(ix) of the Act can be made applicable. In the present case, the owner of the house voluntarily has foregone the right to collect the rent, since the agreement holder is in occupation of the property as per the sale agreement by way of part performance of the contract of sale. Under such circumstances, the Tribunal was not correct in stating that when the property was occupied by the agreement holder, it should be deemed to be vacant and the vacancy remission should be given under S. 24(1)(ix) of the Act. In view of the foregoing reasons, we consider that the order passed by the Tribunal is not in accordance with the law prevalent in the matter of letting out the property by the owner to the tenant. Therefore, the order passed by the Tribunal in setting aside the order of the CIT under S. 263 of the Act is erroneous and the order of the CIT passed under S. 263 of the Act is in order. In that view of the matter, we answer the questions referred to us in the negative and in favour of the Department. No costs.