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2020 (4) TMI 214 - AT - Income TaxIncome from house property - deductions claimed u/s 24(a) - Disallowance of society charges while determining the annual value of the flat - assessee has claimed deductions towards society charges paid to Maple Society out of rental income - HELD THAT:- In respect of society charges for maintenance of property no deductions could be allowed, because while computing income under the head house property, the statutory deduction @ 30% has been provided, which take care all expenses related to repairs and maintenance of the property. Therefore, we are of the considered view that the Ld. AO, as well as the Ld.CIT(A) was right in coming to the conclusion that no further deduction is allowed towards any expenses, when statutory deductions @ 30% is provided u/s 24(a) out of rental income. But, the facts remains that, deduction claimed by the assessee includes amount paid towards local taxes is not emanating from the records. It is the claim of the assessee that it includes municipal taxes, whereas the Ld. AO noted that it is paid for maintenance of the property. Therefore, we are of the considered view that the issues needs to go back to the file of the Ld. AO to ascertain the correct facts with regard to nature of expenses. If, the amount paid to society charges includes municipal taxes levied by the local authorities, then to that extent the Ld. AO is directed to allow deductions out of rental income. If the amount relates to maintenance of property, then the Ld. AO is right in denying deductions for said amount out of rental income. Addition as donation to local Ganesh Mandals etc. - assessee has claimed deductions for donations paid to local mandals such as Ganesha mandals etc deductible u/s 37(1) - HELD THAT:- Assesee claims that these are compulsory donations one has to paid to local mandal in order to run business smoothly. We find that it is a general practice prevailing in business that in some occasions, the business people needs to pay certain donations to local peoples for celebrations of various festivals and functions and those donations are compulsory in nature in order to smoothly conduct the business of the assessee. Therefore, we are of the considered view that donations paid by the assessee to local Ganesha mandals are necessarily incurred wholly and exclusively for the purpose of the business of the assessee and are deductible u/s 37(1) - Decided in favour of assessee.
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