MUMBAI: Actor Pataudi has obtained a favourable order from the Income-Tax Appellate Tribunal (ITAT) on notional rent for a vacant apartment he owns. It dismissed a significantly higher sum the I-T authorities had sought to .

The ITAT accepted the actor‘s plea that he could not rent out the 6,000 sq feet apartment in Hicon Residency, a luxurious building in , because of certain defects in the flat‘s construction that were not as per the approved plan.

Against a taxable rent of Rs 50 lakh determined by the Commissioner (Appeals), the ITAT accepted Rs 11.8 lakh the actor had offered to tax based on a valuation report. The bench, in its order dated August 21, stressed that Pataudi‘s plea before the tax tribunal “cannot be said to be spurious, vexatious, mere bluster or frivolous”.

Under the I-T Act, where an individual owns more than one house, he/she can treat any one of the residential properties as “self-occupied” and exempt from tax. The other houses, even if not given out on rent, are assumed to have been let out and notional rent (after allowing for deductions) has to be offered to tax.

During I-T assessment for the financial year 2011-12, the I-T officer held the sum of notional rent offered to tax by the actor to be on the lower side.

The officer computed the annual value at 7% of the cost of the apartment, which worked out to Rs 81.1 lakh. After allowing a standard deduction of 30%, the officer sought to tax Rs 56.8 lakh as “income from house property”. Pataudi approached the Commissioner (Appeals), who dismissed as spurious letters from real estate agents that the property could not be let out in the present condition.

However, based on the rent another flat in the same building had fetched, the official reduced the taxable income to Rs 50.4 lakh.

Pataudi appealed to the ITAT, which observed that “letting out a house which is not constructed as per an approved plan cannot be forced”. The actor also submitted that the property was too large to be let out and he had to spend over Rs 50 lakh on alterations to split the flat into three. The tribunal held that Pataudi would be entitled to the vacancy allowance and accepted the notional rent of Rs 11.8 lakh offered to tax by the actor.

The I-T Act provides for a vacancy allowance, covering a situation where the intention is to let out the property but it remains vacant for the whole or part of the financial year.

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