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2022 (11) TMI 1203 - AT - Income TaxHouse property income - assessee has already claimed deduction u/s 24 on the rental income earned by it and it had voluntarily made disallowance of expenses debited on account of earning of such rental income - AO has made disallowance of 10% of operating expenses, employee benefit expenses and administrative & general expenses, keeping in view that the total rental income is approximately 10% of total revenue/income including rental and hotel business - CIT-A deleted the addition - HELD THAT:- The principle of res judicata does not apply to the income-tax proceedings, but, rule of consistency is always respected by the tax authorities In the present case, the assessee had shown and included in the other income an amount received as maintenance charges, but, the expenditure towards maintenance of rental area has been incurred from the common pool of expenses which provoked the AO to make the impugned disallowance. We observe that the AO has not made any allegation regarding proportionate lease rent and municipal taxes related to rental portion, but, the disallowance of 10% of total expenses incurred by the assessee on other operating expenses, employee benefit expenses and administrative & general expenses has been made. Therefore, the argument of double disallowance has no legs to stand and, thus, we dismiss the same. Obviously, when the assessee is claiming deduction u/s 24 of the Act on the rental income earned by it, then, it is not entitled for claiming any depreciation on the commercial block from which rental income has been earned. From the assessment order, we also observe that it is not the case of the AO that the assessee has claimed depreciation on the rental commercial block and, therefore, he is making disallowance of proportionate expenditure. Therefore, this contention of the ld. Counsel of the assessee is also not acceptable. CIT(A) was not correct and justified in deleting the disallowance by observing that the AO, without identifying any expenses attributable to rental income, assumption of the AO without identifying any expenses attributable to rental income and such disallowance without identifying any expenses cannot be sustained. As the ld. CIT(A) has ignored some factual position as noted above from the audited accounts of the assessee and has completely ignored the audited financial statements and accounts of the assessee especially table 21, 22 and 25 wherein some expenses are clearly identifiable and attributable to hotel business as well as rental activity and which has been incurred from the common pool and the assessee has not made any sustainable and acceptable apportionment to establish that the actual maintenance charges received by it are equal or less than the actual expenses incurred from common pool on the rental operation towards other expenses, employee benefit expenses and other administrative & general expenses. Therefore, the issue is restored to the file of the AO with a direction to identify the expenses pertaining to hotel and rental activity from common pool as per table 21, 22 and 25 of accounts and to make proportionate and appropriate disallowance on rental area/portion maintenance. Appeal filed by the Revenue is allowed for statistical purposes only.
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