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2016 (6) TMI 730 - AT - Income TaxIncome derived from mere letting out of property - receipt of facility charges for providing specific services like house-keeping, security, etc. - business income or income from house property - Held that:- Amount received from the tenants as ‘rent’ for letting of the property was assessable under section 22 of the Act as “income from house property” and the other receipts in respect of the services rendered to the tenants was liable to be assessed under section 28 of the Act as ‘business profits’. In our view, the ratio laid down by the Hon’ble Gujarat High Court in the case of Sarabhai (P) Ltd.(2002 (11) TMI 32 - GUJARAT High Court ) covers the instant situation. Undisputedly, the ‘facility service charges’ are being received by the assessee in return of providing specific services like house-keeping, security, etc. To the similar effect is also the judgment of the Hon’ble Madras High Court in the case of A.K.Complex (2007 (6) TMI 177 - MADRAS High Court ), which was relied upon by the assessee before us. The argument of the Revenue that services rendered by the assessee are not of special nature, and they are of routine nature expected to be provided by the Landlord, is of no consequence to decide the controversy in question. This is for the reason that factually it has not been disputed by the Revenue that services by way of housekeeping, security, etc. have been rendered by the assessee. Moreover, it has to be deciphered on the basis of terms and conditions in each case as to the nature of the services that may be provided by the owner of property to its tenants to decide as to whether they are distinct from an activity which is merely because of ownership of the property. In the present case, it is quite evident that the said services are distinct from letting out of the property and, therefore, assessee is justified in asserting that the same be taxed as ‘business income’. Thus, on this aspect, we set-aside the order of the CIT(A) and direct the Assessing Officer to recompute the income in view of the aforesaid directions Disallowance of expenditure - Held that:- P&L Account pertaining to administrative expenses reveal that various expenses on account of repairs and maintenance, filing fee, post and telegraph, bank charges, accounting charges, audit fee, etc. have been debited apart from expenses incurred on house-keeping and security charges, with which we have dealt with in the earlier part of this order. In our view, the Assessing Officer has mechanically disallowed the entire expenditure without appreciating that certain bare minimum expenses are liable to be incurred by the assessee company in order to maintain its status of a corporate body. Therefore, we deem it fit and proper to restore the matter back to the file of Assessing Officer in order to examine the allowability of expenditure afresh in the aforesaid light and thereafter recompute the income of the assessee. Thus, on this issue the assessee succeeds for statistical purposes.
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