TMI Blog2014 (1) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... r any steps taken for letting out the property in question were related to business of the assessee - Following CIT vs. H.G. Gupta & Sons [1983 (12) TMI 54 - DELHI High Court] - The said expenditure cannot be said to be having any bearing on the annual letting value of the property - As such any expenditure incurred for payment of professional fees etc. as mentioned above cannot be said to be an allowable deduction - Decided in favour of assessee. Advise and consultation – Held that:- The said expenditure has been incurred for payment as consultation charges in relation to rain water harvesting system installation in the building - The business of the assessee has been development and sale of the property and the installation of rain water harvesting system was a part of the development activity and the consultation charges were paid in relation to installation of the said system - It can be said to be incurred in relation property development business of the assessee - The same is an allowable deduction. Era architechts – Held that:- The above expenditure has been claimed to be incurred towards interior designing work of the single screen cinema - Apart from property develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "income from house property" and had also claimed statutory deductions of sum equal to 30% of the annual letting value under section 24 of the Income Tax Act. Since the expenditure of brokerage paid was not related to the business of the assessee hence the same was disallowed. In first appeal, the ld. CIT(A) after considering the submissions of the assessee held that such type of expenditure relating to brokerage paid for facilitation/arranging for the lessee for letting out of the property was not allowable as business expenditure, hence confirmed the order of the AO on this issue. 3. Before us, the submissions of the ld. A.R. have been that the assessee in fact has been in the business of development and sale of property. There was lull/slow down in the real estate business. Hence the assessee could not sell his property and to avoid losses and also acting on the principle of commercial expediency, it was decided to lease out the property till the market becomes favourable for the sale of the property. It has been further contended by the ld. A.R. that letting out of the property for a short duration was incidental to the commercial business of real estate of the assessee, hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to be incidental to the business of the assessee, especially when the rental income has been claimed under the head 'income from house property' and the statutory deduction upon which has also been claimed. The ld. A.R. has relied upon an authority of the co-ordinate bench of the Tribunal in the case of 'Sharmila Tagore' - [(2006) 150 Taxman 4 (Mum)] and also another authority in the case of 'Suman Didwania' (ITA No.5805/M/10) decided on 15.02.12 wherein the payment of maintenance charges/non occupancy charges paid to housing society have been held to be allowable deduction, while arriving at annual letting value of the property. 5. On the other hand the ld. D.R. has relied upon an authority of the Hon'ble Delhi High Court in the case of CIT vs. 'H.G. Gupta Sons' [(1984) 149 ITR 253 (Delhi) wherein the Hon'ble Delhi High Court has held that if a particular type of expenditure is not specifically provided to be deductable under section 23 24 of the I.T.Act, the same cannot be claimedas deduction out of the annual letting value observing that the provisions of section 23 24 of the Income Tax Act are exhaustive. The relevant part of the observations of the Hon'ble Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005) 96 ITD 57 (MUM.)/[2005] 96 TTJ (MUM.) 1124] and further in the case of 'Scaffold Properties Pvt. Ltd.' (ITA No.403/Mum/2008) decided on 25.04.12, wherein the co-ordinate benches of the Tribunal have specifically held that the brokerage and commission paid to lease out the property is not an allowable deduction while determining the annual letting value of the property. In view of the law laid down by the Hon'ble Delhi High Court as well as the specific findings on the issue under consideration of the co-ordinate benches of the Tribunal, we do not find any merit in the submissions of the assessee and this ground of the appeal is accordingly dismissed. Ground No.II Ground No.II of the appeal is reproduced as below: "1. The CIT(A) erred in not allowing the brokerage expenses of Rs.61,73,200/- as a reduction, while computing annual letting value of the leased premises on the alleged ground that there was no specific provision u/s 24 of the Act for allowing such expenses as a deduction. 2. The Appellant prays that the above expenditure of Rs.61,73,200/- be considered as a reduction while computing annual letting value." 7. This ground of appeal has been taken by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,25,000/- was relating to business of the assessee nor the same can be said to be allowable deduction for determining the annual letting value of the property. The said expenditure cannot be said to be having any bearing on the annual letting value of the property and in view of the judgment of the Hon'ble Delhi High Court in the case of 'H.G. Gupta Sons' (supra) and the co- ordinate bench of the Tribunal in the cases of 'Excellent Associates' (supra) and 'Scaffold Properties Pvt. Ltd.' (supra), this issue is also decided against the assessee and in favour of the Revenue. Ground No.V Ground No.V is reproduced as under: "1. The CIT(A) erred in disallowing various Professional expenses aggregating to Rs.1,65,554/- incurred for the business of the Appellant on the alleged ground that only administrative expenses can be claimed as a deduction during the period of dormant business. 2. The Appellant prays that the above expenditure that had been incurred during a temporary lull in the business be allowed under the provisions of the Act." 10. The AO observed from the profit loss account that the assessee had claimed the following expenses as business expenditure. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees, supervising completion certificate for occupation certificate. 13. In view of our findings above, expenditure paid towards consultancy for supervision, improvement and development of the property was related to business of the assessee, hence this expenditure is also held to be an allowable deduction and is directed accordingly. iv) Valuation of property: Rs.16,836/- The said expenditure has been claimed to be incurred for getting the valuation of the property done for the purpose of its letting out. The said expenditure as observed can not be said to be in relation to the business of the assessee as the letting out of the property has never been the business of the assessee. In view of our findings given above, while dealing with the ground No.I II of the present appeal, this expenditure cannot be held to be allowable deduction and hence the order of the lower authorities relating to disallowance of this expenditure is upheld. v) Valuation fees paid for cinema theatre: Rs.25,254/- This expenditure has been claimed towards fees paid for valuation of cinema theatre for giving it to Municipal Corporation. As observed above, the valuation of fees paid for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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