Short Overview: Assessee had categorically stated that he had all intention to let out premises but for want of suitable tenants. Despite best efforts put in by estate agents, whose services had been engaged, he could not find suitable tenants during the previous year under consideration and the property remained vacant for whole of the year. Under the circumstances considering that no income has been realized or accrued and assessee declared nil income in respect of such premises as AO had not even considered the admissible deduction towards municipal taxes and society maintenance charges, addition made on account of deemed rent was deleted.

AO made additions on account of deemed rent in respect of properties of assessee lying vacant. on the ground that premises were vacant during whole of the year and not let out at all during the year, hence, section 23(1)(c) would not apply and, therefore, assessee was not eligible for any deduction on account of vacancy and annual value of all the vacant property had to be taken in terms of section 23(1)(a).

It is held that assessee had categorically stated that he had all intention to let out premises but for want of suitable tenants. Despite best efforts put in by estate agents, whose services had been engaged, he could not find suitable tenants during the previous year under consideration and the remained vacant for whole of the year.  Under the circumstances considering that no income has been realized or accrued and assessee declared nil income in respect of such premises and as AO had not even considered the admissible deduction towards Municipal taxes and society maintenance charges, addition made on account of deemed rent was deleted.

Decision: In assessee’s favour.