The flat was let for three years, then lay empty for the whole of this year. Is the annual value nil?
Yes, on this Tribunal view. Where a property was let in an earlier year and is found vacant for the whole of the year under consideration, s.23(1)(c) applies and the annual value is nil - provided the vacancy was not because the owner took the property back for his own occupation. The Tribunal read 'property is let' in clause (c) as deliberately different from 'house is actually let' used elsewhere in s.23.
Decided by the ITAT (ITAT Mumbai Bench 'C' — G. Manjunatha (Accountant Member) and Ravish Sood (Judicial Member); order authored by Ravish Sood (Judicial Member)) on 2018-09-19, reported as (2018) 173 ITD 82 / [2018] 97 taxmann.com 534 (Mum.)(Trib.); IT Appeal Nos. 2892 (Mum.) of 2016 and 66 (Mum.) of 2017; assessment years 2011-12 and 2012-13. It bears on section 22, section 23, section 23(1)(a), section 23(1)(c) of the Income Tax Act 1961, in House Property matters.
This is the practical answer for the ordinary landlord whose tenant left and who could not find another. The pivot is documentary and simple: prove the earlier letting, and prove you did not move in. The textual point does the work — clause (c) says 'property is let' where the rest of s.23 says the house is actually let — and this order also answers the department's usual authority on its own terms, holding that Vivek Jain, read at its paras 14 and 15, itself covers a property let for two or more years and vacant for the whole previous year. Later Mumbai benches have taken the same line, so the reasoning is settled at that level even though no High Court has affirmed it.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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By a leave and licence agreement dated 22.04.2007 the assessee let two units of a Mumbai building to a construction company for 36 months commencing 10.04.2007, renewable for a further 24 months at a licence fee 25 per cent higher. The rent was offered as income from house property in the earlier years. On expiry of the 36 months the licensee vacated and said it would not renew. The units then remained vacant for the whole of assessment year 2011-12 and the whole of assessment year 2012-13, with no rent received and no self-occupation by the assessee. The Assessing Officer accepted those facts but computed the annual value under s.23(1)(a) at Rs 81,99,360 for the first year and Rs 90,19,296 for the second, and the Commissioner (Appeals) sustained both.
Both appeals were allowed and the annual value was taken at nil under s.23(1)(c); the s.23(1)(a) computations were vacated and the orders below set aside, with nothing restored. Actual letting during the year is not a prerequisite for clause (c), provided the property was let in the earlier period, was vacant for the whole of the year under consideration, and the vacancy was not for the assessee's own occupation, the assessee continuing to hold it for the purpose of letting. The Tribunal also held that the Commissioner (Appeals) had misconceived Vivek Jain v. ACIT (AP): on its reading, that judgment does take within its sweep a property let for two or more years but vacant for the whole of the previous year.
The Tribunal's reasoning is textual. Clause (c) speaks of a property that 'is let', while sub-section (3) of s.23 speaks of a house that is 'actually let'; the choice of words is conscious, purposive and intentional, and the one cannot be substituted for the other. The purpose of the words 'property is let' in clause (c) is identified and confined: they are there to keep self-occupied properties out of the clause, because although the annual value of a house specified as self-occupied is nil, the annual value of the remaining self-occupied properties must be determined under s.23(1)(a) — and that limited purpose cannot be stretched further. The Tribunal was speaking of AYs 2011-12 and 2012-13, when s.23(4) allowed the nil value for one house only; the Finance Act 2019 raised that to two houses with effect from AY 2020-21, which changes the arithmetic but not this reasoning. The Tribunal recorded as a finding that it was not the department's case that the property remained under the assessee's self-occupation after the licensee left, and adopted the co-ordinate bench reasoning in Informed Technologies India Ltd., which in turn quoted Premsudha Exports: what is required is that the property be held for letting with an intention to let in the relevant year, coupled with efforts to let it, and that requirement must be satisfied in each year (para 7). It then read paras 14 and 15 of Vivek Jain and held that the Commissioner (Appeals) had misconceived it: while the clause (c) benefit cannot extend to a property never let out at all, it does encompass a property that had remained let out for two or more years but was vacant for the whole of the previous year (para 8).
the requirement that the 'house is actually let' during the year is not to be taken as a prerequisite for bringing the case of an assessee within the sweep of Sec. 23(1)(c) of the 'Act', as long as the property is let in the earlier period and is found vacant for the whole year under consideration, subject to the condition that such vacancy of the property is not for self occupation of the same by the assessee who continues to hold the same for the purpose of letting out.
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Handle my notice → Ask a CA on WhatsAppYes, on this Tribunal view. Where a property was let in an earlier year and is found vacant for the whole of the year under consideration, s.23(1)(c) applies and the annual value is nil - provided the vacancy was not because the owner took the property back for his own occupation. The Tribunal read 'property is let' in clause (c) as deliberately different from 'house is actually let' used elsewhere in s.23. This was decided by the ITAT (ITAT Mumbai Bench 'C' — G. Manjunatha (Accountant Member) and Ravish Sood (Judicial Member); order authored by Ravish Sood (Judicial Member)) and bears on section 22, section 23, section 23(1)(a), section 23(1)(c) of the Income Tax Act 1961. It is reported as (2018) 173 ITD 82 / [2018] 97 taxmann.com 534 (Mum.)(Trib.); IT Appeal Nos. 2892 (Mum.) of 2016 and 66 (Mum.) of 2017; assessment years 2011-12 and 2012-13. This is the practical answer for the ordinary landlord whose tenant left and who could not find another. The pivot is documentary and simple: prove the earlier letting, and prove you did not move in. The textual point does the work — clause (c) says 'property is let' where the rest of s.23 says the house is actually let — and this order also answers the department's usual authority on its own terms, holding that Vivek Jain, read at its paras 14 and 15, itself covers a property let for two or more years and vacant for the whole previous year. Later Mumbai benches have taken the same line, so the reasoning is settled at that level even though no High Court has affirmed it. If it applies to you, the first step is this: Produce the earlier tenancy or licence agreements and the rent offered in earlier years to establish that the property was let in a prior period.
By a leave and licence agreement dated 22.04.2007 the assessee let two units of a Mumbai building to a construction company for 36 months commencing 10.04.2007, renewable for a further 24 months at a licence fee 25 per cent higher. The rent was offered as income from house property in the earlier years. On expiry of the 36 months the licensee vacated and said it would not renew. The units then remained vacant for the whole of assessment year 2011-12 and the whole of assessment year 2012-13, with no rent received and no self-occupation by the assessee. The Assessing Officer accepted those facts but computed the annual value under s.23(1)(a) at Rs 81,99,360 for the first year and Rs 90,19,296 for the second, and the Commissioner (Appeals) sustained both. The matter was decided on 2018-09-19 by the ITAT (ITAT Mumbai Bench 'C' — G. Manjunatha (Accountant Member) and Ravish Sood (Judicial Member); order authored by Ravish Sood (Judicial Member)). On those facts the ITAT held as follows. Both appeals were allowed and the annual value was taken at nil under s.23(1)(c); the s.23(1)(a) computations were vacated and the orders below set aside, with nothing restored. Actual letting during the year is not a prerequisite for clause (c), provided the property was let in the earlier period, was vacant for the whole of the year under consideration, and the vacancy was not for the assessee's own occupation, the assessee continuing to hold it for the purpose of letting. The Tribunal also held that the Commissioner (Appeals) had misconceived Vivek Jain v. ACIT (AP): on its reading, that judgment does take within its sweep a property let for two or more years but vacant for the whole of the previous year.
The Tribunal's reasoning is textual. Clause (c) speaks of a property that 'is let', while sub-section (3) of s.23 speaks of a house that is 'actually let'; the choice of words is conscious, purposive and intentional, and the one cannot be substituted for the other. The purpose of the words 'property is let' in clause (c) is identified and confined: they are there to keep self-occupied properties out of the clause, because although the annual value of a house specified as self-occupied is nil, the annual value of the remaining self-occupied properties must be determined under s.23(1)(a) — and that limited purpose cannot be stretched further. The Tribunal was speaking of AYs 2011-12 and 2012-13, when s.23(4) allowed the nil value for one house only; the Finance Act 2019 raised that to two houses with effect from AY 2020-21, which changes the arithmetic but not this reasoning. The Tribunal recorded as a finding that it was not the department's case that the property remained under the assessee's self-occupation after the licensee left, and adopted the co-ordinate bench reasoning in Informed Technologies India Ltd., which in turn quoted Premsudha Exports: what is required is that the property be held for letting with an intention to let in the relevant year, coupled with efforts to let it, and that requirement must be satisfied in each year (para 7). It then read paras 14 and 15 of Vivek Jain and held that the Commissioner (Appeals) had misconceived it: while the clause (c) benefit cannot extend to a property never let out at all, it does encompass a property that had remained let out for two or more years but was vacant for the whole of the previous year (para 8). In the words reproduced by the source cited on this page: "the requirement that the 'house is actually let' during the year is not to be taken as a prerequisite for bringing the case of an assessee within the sweep of Sec. 23(1)(c) of the 'Act', as long as the property is let in the earlier period and is found vacant for the whole year under consideration, subject to the condition that such vacancy of the property is not for self occupation of the same by the assessee who continues to hold the same for the purpose of letting out." The decision followed or applied Vikas Keshav Garud v. ITO [2016] 71 taxmann.com 214 / 160 ITD 7 (Pune - Trib.) — followed, para 7; Asstt. CIT v. Dr. Prabha Sanghi [2012] 27 taxmann.com 317 / 139 ITD 504 (Delhi - Trib.) — followed, para 7; Premsudha Exports (P.) Ltd. v. Asstt. CIT [2008] 110 ITD 158 (Mum.) — followed, para 7; Informed Technologies India Ltd. v. Dy. CIT [2016] 75 taxmann.com 128 / [2017] 162 ITD 153 (Mum. - Trib.) — followed, para 7.
It was decided by the ITAT on 2018-09-19 and is reported as (2018) 173 ITD 82 / [2018] 97 taxmann.com 534 (Mum.)(Trib.); IT Appeal Nos. 2892 (Mum.) of 2016 and 66 (Mum.) of 2017; assessment years 2011-12 and 2012-13. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 22, section 23, section 23(1)(a), section 23(1)(c), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. Both appeals were allowed and the annual value was taken at nil under s.23(1)(c); the s.23(1)(a) computations were vacated and the orders below set aside, with nothing restored. Actual letting during the year is not a prerequisite for clause (c), provided the property was let in the earlier period, was vacant for the whole of the year under consideration, and the vacancy was not for the assessee's own occupation, the assessee continuing to hold it for the purpose of letting. The Tribunal also held that the Commissioner (Appeals) had misconceived Vivek Jain v. ACIT (AP): on its reading, that judgment does take within its sweep a property let for two or more years but vacant for the whole of the previous year. It arises in House Property matters, on section 22, section 23, section 23(1)(a), section 23(1)(c) of the Income Tax Act 1961, and was decided by ITAT Mumbai Bench 'C' — G. Manjunatha (Accountant Member) and Ravish Sood (Judicial Member); order authored by Ravish Sood (Judicial Member). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Show the property was not self-occupied during the vacant year — that is the condition the Tribunal attached, and here the department did not even allege it. Frame the argument on the wording: clause (c) says 'property is let' while sub-section (3) says the house is actually let. Keep evidence of the intention to let and of efforts to let for each year separately, since that requirement has to be satisfied year by year. If the property has never been let in any year, do not rely on this decision — Vivek Jain excludes that case on any reading.
Still good law. Later treatment has been found and read: Classic Mall Development Company Ltd. v. Asstt. CIT [2025] 173 taxmann.com 94 / [2025] 212 ITD 302 (Mumbai - Trib.), ITA No. 5320/Mum/2024, assessment year 2016-17, decided 21 March 2025, records this decision as followed at its para 10 and reproduces para 8 of this order verbatim at its para 8.4. That line is carried forward in Sofotel Infra (P.) Ltd. v. Dy. CIT [2026] 184 taxmann.com 652 / [2026] 218 ITD 139 (Mumbai - Trib.), ITA No. 7188 (Mum) of 2025, decided 24 March 2026, which follows Classic Mall on the same reasoning. The qualification to publish with the upgrade: all of these are co-ordinate Mumbai benches, so the support is horizontal and no High Court has affirmed the reading. The earlier note's account of Kamal Kumar v. ACIT [2022] 140 taxmann.com 106 (Delhi)(Trib.) is superseded as the only later reference: that decision remains a narrowing observation about a legal disability created by municipal action, not an application of this order. That finding was checked against a published source, which is linked on this page, on 2026-08-24. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order has now been read in full and the entry is drawn from its numbered paragraphs; the sentence formerly quoted here was a blog headnote and has been replaced with the Tribunal's own words at para 7. The reason the property could not be let after the first 36 months is on the record: the licensee vacated on expiry of the licence and said it would not renew, and the assessee's evidence of an intention to let was the renewal clause in the agreement itself. The order also decides, at para 8, that the Commissioner (Appeals) had misconceived the Andhra Pradesh High Court's decision in Vivek Jain — the warning previously carried on this entry has been rewritten accordingly. One unrelated ground for assessment year 2011-12, on a short-term capital gain, was not pressed and is not decided; and once the annual value was held to be nil, the grounds attacking the quantification for the second year were dismissed as infructuous. Note the limits: it turns on there having been an actual letting in an earlier period, so it does not help a property that has never been let, and it says nothing about a developer's unsold stock, which is governed by s.23(5). It does not decide how many years of continuing vacancy the clause will absorb; Vivek Jain caps it by reference to the period for which the property was let, and this order does not address that limit. It is no help where the property has never been let. It does not deal with unsold stock under s.23(5). No High Court has affirmed the reading, the support being from co-ordinate Mumbai benches. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Both appeals were allowed and the annual value was taken at nil under s.23(1)(c); the s.23(1)(a) computations were vacated and the orders below set aside, with nothing restored. Actual letting during the year is not a prerequisite for clause (c), provided the property was let in the earlier period, was vacant for the whole of the year under consideration, and the vacancy was not for the assessee's own occupation, the assessee continuing to hold it for the purpose of letting. The Tribunal also held that the Commissioner (Appeals) had misconceived Vivek Jain v. ACIT (AP): on its reading, that judgment does take within its sweep a property let for two or more years but vacant for the whole of the previous year.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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