The tax is levied on the
income-earning potential of the property, and not on the income generated from
the property. However, if the property is let out and is vacant for a part of
the year, the assessee is entitled to proportionate relief called "vacancy
allowance" under Section 23(1)( c) of Act.
Vaccancy Allowance u/s 23(1)(c)
Where let out property is vacant for a part of the year
and owning to vacancy, the actual rent is lower than ALV, then the actual rent
received or receivable will be GAV of the property.
Provisions of Section
23(1)(c) dealing with vacancy allowance applies only to a property which is let
out – Self-occupied property is not eligible for vacancy allowance
Where the property has not
been let out at all during the year, there is no question of granting any
vacancy allowance under Section 23(1)(c) – Period for which a let out property
may remain vacant cannot exceed period for which property has been let out
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