My property was let for only a few days in the year and lay vacant for the rest. The officer has taxed the full twelve-month notional value. Can section 23(1)(c) substitute the small rent I actually received?
Yes, on this order. The Pune Bench held that section 23(1)(c) applies once three conditions are met: the property or part of it was let, it was vacant for the whole or any part of the previous year, and the rent actually received or receivable is, because of that vacancy, less than the sum computed under clause (a). The assessee's Ahmedabad mall was let for fifteen days in each year for Rs 30,000. The Assessing Officer had adopted an annual letting value of Rs 75,48,492 under clause (a) and added Rs 52,83,945 after the standard deduction. The Tribunal deleted the addition and directed the officer to allow section 23(1)(c).
Decided by the ITAT (Income Tax Appellate Tribunal, Pune Bench 'B' - R.K. Panda, Vice President, and Astha Chandra, Judicial Member) on 2024-06-28, reported as [2024] 164 taxmann.com 310 (Pune - Trib.); ITA Nos. 91 and 92/PUN/2024 [Assessment years 2016-17 and 2017-18]. It bears on section 23(1)(c), section 23, section 22 of the Income Tax Act 1961, in House Property matters.
Section 23(1)(a) can produce a notional annual value many times the rent a nearly empty property actually earns, and officers apply it as a matter of course wherever a building is not let for the full year. This order is one of the clearest recent statements of when clause (c) displaces clause (a): a short but genuine letting is enough to make the property one that is let, and the vacancy for the rest of the year then brings the actual rent in as the annual value. It also supplies a practical point that costs the department nothing to concede and much to fight — an officer who has taxed the rent cannot also say the property was never let. What it does not settle is the property vacant for the whole year; the Bench distinguished Vivek Jain rather than differing from it.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee owned Dev Arcade Mall at Ahmedabad. For assessment years 2016-17 and 2017-18 the Assessing Officer proceeded on the footing that the mall was wholly vacant, worked out a letting value of Rs 6,29,041 a month, adopted an annual letting value of Rs 75,48,492 under section 23(1)(a) and, after the thirty per cent standard deduction, added Rs 52,83,945 to income under the head income from house property in each year. The assessee's case was that about 12,000 sq ft had in fact been let to Mr Himansu B. Dave for an exhibition - 16 March to 31 March in the first year and 1 April to 15 April in the second - for Rs 30,000 in each year. He produced the tenant's confirmation and a certificate from the mall management, and the rent had been offered in the returns and accepted. The property had been let in earlier years and stood vacant for the remainder of each year. The Commissioner (Appeals) sustained the addition, relying on Vivek Jain.
Both appeals were allowed. The Tribunal held that the three conditions of section 23(1)(c) were satisfied in each year: the property had been let, it was vacant for part of the previous year, and the rent actually received was, owing to that vacancy, less than the sum computed under clause (a). The annual value had therefore to be taken at the rent received or receivable - Rs 30,000 in each year - and not at the clause (a) figure of Rs 75,48,492. The Tribunal recorded that the Assessing Officer and the Commissioner (Appeals), having accepted the rental income offered in the returns, could not at the same time deny that the property had been let, even if only for a short period. It directed the Assessing Officer to allow the benefit of section 23(1)(c) and amend the assessment orders accordingly, so the addition of Rs 52,83,945 in each year went.
The Bench began with the words of clause (c) and broke them into three conditions - the property or any part of it must be let, it must have been vacant during the whole or any part of the previous year, and owing to that vacancy the actual rent received or receivable must be less than the sum referred to in clause (a). It read the condition of letting as a description of the property's character, not as a requirement that it be let throughout the year: the statute itself contemplates vacancy for the whole or any part of the year, and reading clause (c) as inapplicable where the vacancy runs long would make the word 'whole' redundant. On the facts it treated the department's acceptance of the returned rent as decisive on the first condition, since the same officer could not tax the rent and deny the letting. Vivek Jain v. ACIT (2011) 337 ITR 74 (AP), on which the lower authorities relied, was distinguished rather than doubted: there the property had not been let at all during the year under review, whereas here it had been let for fifteen days with vacancy for the balance. Having placed the case outside Vivek Jain, the Bench followed a line of Tribunal decisions - among them Classic Citi Investments, Dhaval D. Patel, Sonu Realtors, Vikas Keshav Garud and Asfa Technologies - and applied clause (c).
Having accepted the rental income offered to tax by the assessee in his income tax return, the Ld. AO/CIT(A) cannot deny that the property was leased out in both the AYs, though for short period.
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Handle my notice → Ask a CA on WhatsAppYes, on this order. The Pune Bench held that section 23(1)(c) applies once three conditions are met: the property or part of it was let, it was vacant for the whole or any part of the previous year, and the rent actually received or receivable is, because of that vacancy, less than the sum computed under clause (a). The assessee's Ahmedabad mall was let for fifteen days in each year for Rs 30,000. The Assessing Officer had adopted an annual letting value of Rs 75,48,492 under clause (a) and added Rs 52,83,945 after the standard deduction. The Tribunal deleted the addition and directed the officer to allow section 23(1)(c). This was decided by the ITAT (Income Tax Appellate Tribunal, Pune Bench 'B' - R.K. Panda, Vice President, and Astha Chandra, Judicial Member) and bears on section 23(1)(c), section 23, section 22 of the Income Tax Act 1961. It is reported as [2024] 164 taxmann.com 310 (Pune - Trib.); ITA Nos. 91 and 92/PUN/2024 [Assessment years 2016-17 and 2017-18]. Section 23(1)(a) can produce a notional annual value many times the rent a nearly empty property actually earns, and officers apply it as a matter of course wherever a building is not let for the full year. This order is one of the clearest recent statements of when clause (c) displaces clause (a): a short but genuine letting is enough to make the property one that is let, and the vacancy for the rest of the year then brings the actual rent in as the annual value. It also supplies a practical point that costs the department nothing to concede and much to fight — an officer who has taxed the rent cannot also say the property was never let. What it does not settle is the property vacant for the whole year; the Bench distinguished Vivek Jain rather than differing from it. If it applies to you, the first step is this: Put the actual letting on record first: the written agreement, the tenant's confirmation, and proof that the rent was offered in the return.
The assessee owned Dev Arcade Mall at Ahmedabad. For assessment years 2016-17 and 2017-18 the Assessing Officer proceeded on the footing that the mall was wholly vacant, worked out a letting value of Rs 6,29,041 a month, adopted an annual letting value of Rs 75,48,492 under section 23(1)(a) and, after the thirty per cent standard deduction, added Rs 52,83,945 to income under the head income from house property in each year. The assessee's case was that about 12,000 sq ft had in fact been let to Mr Himansu B. Dave for an exhibition - 16 March to 31 March in the first year and 1 April to 15 April in the second - for Rs 30,000 in each year. He produced the tenant's confirmation and a certificate from the mall management, and the rent had been offered in the returns and accepted. The property had been let in earlier years and stood vacant for the remainder of each year. The Commissioner (Appeals) sustained the addition, relying on Vivek Jain. The matter was decided on 2024-06-28 by the ITAT (Income Tax Appellate Tribunal, Pune Bench 'B' - R.K. Panda, Vice President, and Astha Chandra, Judicial Member). On those facts the ITAT held as follows. Both appeals were allowed. The Tribunal held that the three conditions of section 23(1)(c) were satisfied in each year: the property had been let, it was vacant for part of the previous year, and the rent actually received was, owing to that vacancy, less than the sum computed under clause (a). The annual value had therefore to be taken at the rent received or receivable - Rs 30,000 in each year - and not at the clause (a) figure of Rs 75,48,492. The Tribunal recorded that the Assessing Officer and the Commissioner (Appeals), having accepted the rental income offered in the returns, could not at the same time deny that the property had been let, even if only for a short period. It directed the Assessing Officer to allow the benefit of section 23(1)(c) and amend the assessment orders accordingly, so the addition of Rs 52,83,945 in each year went.
The Bench began with the words of clause (c) and broke them into three conditions - the property or any part of it must be let, it must have been vacant during the whole or any part of the previous year, and owing to that vacancy the actual rent received or receivable must be less than the sum referred to in clause (a). It read the condition of letting as a description of the property's character, not as a requirement that it be let throughout the year: the statute itself contemplates vacancy for the whole or any part of the year, and reading clause (c) as inapplicable where the vacancy runs long would make the word 'whole' redundant. On the facts it treated the department's acceptance of the returned rent as decisive on the first condition, since the same officer could not tax the rent and deny the letting. Vivek Jain v. ACIT (2011) 337 ITR 74 (AP), on which the lower authorities relied, was distinguished rather than doubted: there the property had not been let at all during the year under review, whereas here it had been let for fifteen days with vacancy for the balance. Having placed the case outside Vivek Jain, the Bench followed a line of Tribunal decisions - among them Classic Citi Investments, Dhaval D. Patel, Sonu Realtors, Vikas Keshav Garud and Asfa Technologies - and applied clause (c). In the words reproduced by the source cited on this page: "Having accepted the rental income offered to tax by the assessee in his income tax return, the Ld. AO/CIT(A) cannot deny that the property was leased out in both the AYs, though for short period."
It was decided by the ITAT on 2024-06-28 and is reported as [2024] 164 taxmann.com 310 (Pune - Trib.); ITA Nos. 91 and 92/PUN/2024 [Assessment years 2016-17 and 2017-18]. 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 23(1)(c), section 23, section 22, 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. The Tribunal held that the three conditions of section 23(1)(c) were satisfied in each year: the property had been let, it was vacant for part of the previous year, and the rent actually received was, owing to that vacancy, less than the sum computed under clause (a). The annual value had therefore to be taken at the rent received or receivable - Rs 30,000 in each year - and not at the clause (a) figure of Rs 75,48,492. The Tribunal recorded that the Assessing Officer and the Commissioner (Appeals), having accepted the rental income offered in the returns, could not at the same time deny that the property had been let, even if only for a short period. It directed the Assessing Officer to allow the benefit of section 23(1)(c) and amend the assessment orders accordingly, so the addition of Rs 52,83,945 in each year went. It arises in House Property matters, on section 23(1)(c), section 23, section 22 of the Income Tax Act 1961, and was decided by Income Tax Appellate Tribunal, Pune Bench 'B' - R.K. Panda, Vice President, and Astha Chandra, 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. Point to the officer's own acceptance of the rent as income - he cannot tax the rent and simultaneously treat the property as never let. Argue the three conditions of section 23(1)(c) one at a time instead of arguing generally that notional rent is unfair. Expect Vivek Jain to be cited against you, and be ready to show that your property was in fact let for some part of the year.
Searched for later treatment; none was found. That is not the same as a source affirming it. A citator run against this order returns nothing at all: no decision applies, follows, distinguishes or doubts it, and no appeal or contrary ruling on it was traced. Its later treatment is therefore untested rather than approved. It is in any event a Tribunal order and binds nobody beyond the parties, so the reasoning on s.23(1)(c) - a property let for part of the year and vacant for the remainder - has to be argued on its merits rather than pressed as authority. No source could be cited for that finding. 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 was read on Indian Kanoon's copy; itat.gov.in could not be fetched, so I did not see the Tribunal's own PDF. One correction to the page this replaces: the Bench was taken to Vivek Jain v. ACIT (2011) 337 ITR 74 (AP) - the lower authorities relied on it - and the Tribunal dealt with it expressly, distinguishing it on the ground that there the property had not been let at all during the year. So the tension the earlier page flagged is one the Bench addressed, not one it overlooked. 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. The Tribunal held that the three conditions of section 23(1)(c) were satisfied in each year: the property had been let, it was vacant for part of the previous year, and the rent actually received was, owing to that vacancy, less than the sum computed under clause (a). The annual value had therefore to be taken at the rent received or receivable - Rs 30,000 in each year - and not at the clause (a) figure of Rs 75,48,492. The Tribunal recorded that the Assessing Officer and the Commissioner (Appeals), having accepted the rental income offered in the returns, could not at the same time deny that the property had been let, even if only for a short period. It directed the Assessing Officer to allow the benefit of section 23(1)(c) and amend the assessment orders accordingly, so the addition of Rs 52,83,945 in each year went.
TaxSphere, “Sunil Ramnarayan Mantri v DCIT”, https://taxnotice.vittsphere.com/caselaw/case/sunil-ramnarayan-mantri-v-dcit-23-1-c-let-part-year-then-vacant/ (validity last checked 2026-09-16)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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