Sachin Tendulkar clean bold the Income Tax Ruling in his favor

Section 23(1)(c)

Recently, Mr. Sachin Tendulkar got a favorable ruling from a tribunal over a tax disputed case on one of his vacant property. If you are also the owner of more than one house then you definitely need to read this !!
Lets have an overview of his case and find out how it may help you.

Facts of the Case:

Mr. Sachin had two properties in Pune, one in Treasure Park and another one in Sapphire Park in F.Y 12-13. Now, in the ITR of F.Y 12-13, only the Rental income from the Treasure Park property for nine months at Rs 15,000 was shown which was well accepted by AO. But the assessing officer (AO) raised the question of not charging rental income on the other flat as well as the Treasure Park flat for the full year.

Sachin Tendulkar’s Response :

In response, Mr. Sachin claimed that the Sapphire Park property was vacant for the whole year as he could not find a suitable tenant. Also, he showed the letters written to builders seeking for the same. Therefore, he claimed the benefit of NIL annual value of flat as per Section 23(1)(c) of income tax act, 1961 i.e. no tax on the said flat.

Proceeding of the Case:

  • This explanation was not accepted by the Assessing Officer(AO) and he concluded that the income offered by Mr. Tendulkar was too low. Consequently, he estimated the rental income as 6% of the value of both the flats and made an addition of Rs 8,60,445 to his total income of Rs 612 million.
  • As a result, the sportsperson went to the commissioner (appeals) where the AOs order was held correct but at the same time, the addition to his income was reduced to Rs 1,26,000. According to the commissioner, Tendulkars letters to builders did not have any supporting evidence like dispatch register for his letters etc.
  • Afterward, Mr. Tendulkar made an appeal to the Mumbai Bench of the I-T Appellate Tribunal. According to ITAT, Mr. Tendulkar had made the reasonable effort by asking the builder to find the tenant for the flat. Nevertheless, an appropriate tenant could not find out and thats why the flat remained vacant. Therefore, considering various facts of the case, the commissioners order was not considered and Mr. Tendulkar’s won the case.

Conclusion :

The Benefit u/s 23(1)(c) has always been a debatable issue as it had been interpreted differently by various courts. Some courts allow it only when the property is actually let out while others allow it when the intention of letting out the flat is proved. This is another positive ruling where the interest of the taxpayer has been upheld.

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