B.R. Arora, J.
1. The Income Tax Appellate Tribunal, Jaipur Bench, Jaipur, referred the following question for the opinion of this Court Under Section 256(1) of the Income Tax Act:
Whether on the facts and in the circumstances of the case, the Appellate Tribunal has rightly held that the assessee is not entitled to deduction for vacancy allowance Under Section 24(1)(ix) of the in come-Tax Act read with Explanation thereto Inserted with effect from 1.4.77, for the assessment year 1977-78.
2. The assessee derives income from 1/6th share in the house property situated at Bhagwandas Road, Jaipur. One portion of the said property was let-out by the assessee to M/s. Geoffrey Manners Ltd., at the rent of Rs. 2500/- per month, but during the accounting period relevant to the assessment year in question,i.e. 1977-78, the house remained vacant through-out the year. The Income Tax Officer, while framing the assessment, included the Gross Annual let-in value of the property in the income of the assessee, subject to the deduction of municipal tax and repairs. He did not allow the deduction of vacancy allowance. Dissatisfied with the order passed by the Income Tax Officer, the assessee preferred an appeal before the Appellate Assistant Commissioner and the Appellate Assistant Commissioner Income-Tax allowed the appeal filed by the assessee and held that the deduction on account of vacancy was allowable in view of the amendment to Section 24(1)(ix) of the Income-Tax Act, 1961, with effect from 1.4.1977. Aggrieved with the order passed by the Appellate Assistant Commissioner, allowing the vacancy allowance, the Revenue preferred an appeal before the Income-Tax Appellate Tribunal, Jaipur Bench, Jaipur and the Tribunal, by its judgment dated 29.9.80, allowed the appeal filed by the Revenue. The assessee thereafter moved an application Under Section 25(1) of the Income-Tax Act to refer the two questions, mentioned in the application, for the opinion of the High Court. The Tribunal, by its order dated 18.12.81 referred only one question, mentioned above, for the opinion of the High Court. So far as the second question was concerned, it was observed by the Tribunal that question is not necessary to be referred for the opinion of the High Court as that is not the issue involved in the case.
3. We have heard the learned Counsel for the petitioner Mr. G.S. Bafna and the learned Counsel for the respondent Mr. V.K. Singhal.
4. Section 24(1)(ix) was amended by the Finance (No. 2) Act, 1977 with effect from 1.4.77 and an Explanation was added to sub-clause (ix) to Section 24(1) of the Act, which reads as under:
(ix)-Where the property is let and was vacant during a part of the year, that part of the annual value, which is proportionate to the period, during which the property is wholly unoccupied, or where the property is let-out in part, that portion of the annual value appropriate to any vacant part, which is proportionate to the period during which such part is wholly unoccupied.
The provisions of sub-clause (ix) of Section 24(1) of the Act, prior to the insersion of the Explanation, came-up for consideration before the Hon'ble Supreme Court in the case of C.I.T. v. Smt. Ganga Devi D.B. I.T. Reference No. 120/81 and Their Lordships while interpreting Clause (ix) of Section 24(1) of the Income-Tax Act, observed as under:
When reading Section 24(2)(ix) which speaks of property which is let and which was vacant during a part of the year, we must read it to mean property which was let during the previous year and was vacant during a part of the year. It cannot refer to property which was not let at all during the previous year.
It was further observed:
The total income of the previous year needs to be computed, and the different provisions relating to the computation of income must be read and applied in the context to the facts and circumstances obtaining during that year, unless the context suggests the contrary. Consequently, when reading Section 24(1)(ix), which speaks of property which is let and which was vacant during a part of the year, we must read it to mean property which was let during the previous year and was vacant during a part of the year. It cannot refer to property which was not let at all during the previous year.
5. This question, also, came-up for consideration before this Court in C.7. T. v. Smt. Ganga Devi D.B. Income Tax Reference No. 120/81 and this Court following the decision reported in 1980 (124) I.T.R. 31, answered the question in favour of the department and against the assessee and held that the assessee was not entitled to vacancy remission Under Section 24(1)(ix) of the Income-Tax Act.
6. Now, so far as the position prior to 1.4.77 is concerned, when the Explanation was added to clause(ix) of Section 24(1), it stands concluded by the judgment of the Supreme Court in Mehboob Property Private Properties' case, wherin the Hon'ble Supreme Court has held that the vacancy allowance is permissible only if the properly is let and falls vacant for part of the year, which means that the property must be let all cast for some time during the previous year and where, however, the property remains vacant in the previous year, no vacancy allowance is admissible. The requirement of the provision is, therefore, that the property must be vacant for a part of the year and not for the whole year.
7. Now, we have to see the implication of the Explanation inserted with effect from 1.4,77 is Sub-Clause (ix) of Section 24(1) of the Act. After a careful reading of Clause (ix) of Section 24(1) and the Explnation added to it with effect from 1.4.77, we are of the opinion that the Explanation inserted in 1977 is merely clarificatory in nature and it only amounts to declaration of the pre-existing position and no change in the law has taken place as it only clarifies the existing position of the provision of Section 24(1)(ix). Section 24(1)(ix), thus, covers only situation of vacancy preceding or following the period of let-in during the same year and not for the property, which has not been let-out at all during the relevant year.
8. In this view of the matter, we answer the question in the affirmative, i.e. in favour of the Revenue and against the assessee by holding that the assessee is not entitled to deduction for vacancy allowance Under Section 24(1)(ix) of the Income-Tax Act read with Explanation thereto, inserted with effect from 1.4.77 for the assessment year 1977-78.