TMI Blog2015 (6) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... . Addition on rent received - difference in TDS certificate and computation of total income - Held that:- We do not agree with this claim of the assessee as the method of accounting is only in respect of profits and gains of business or profession or income from other sources. The reconciliation statement filed before us is also not convincing as the assessee is required to compute the income as per the provisions of the law. The undisputed fact is that the assessee has received rent of ₹ 11,87,27,690/- and the same has to be treated as income of the assessee. Therefore, we do not find any reason for not making an addition of ₹ 4,00,697/- - Decided against assessee. Liability of municipal taxes - allowable as income from other sources or income from house property - Held that:- Section 57(iii) shows that any other expenditure not been in the nature of capital expenditure lead out of expanded wholly and exclusively for the purpose of making or earning income which is taxed under the head 'income from other sources'. In our considered opinion, payment of municipal taxes cannot be said to be let out or expanded wholly and exclusively for the purpose of earning amenit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income, the A.O. noticed that the assessee has earned income from house property at ₹ 14,33,47,104/- as income received from lease and amenities charges for letting out of its property. The A.O. called for the detail of the rental income. On perusing the details, the A.O. found that the assessee has entered into two different agreements with HSBC Bank for the lease rental and amenities charges. On further going through the amenities agreement, the A.O. found that the only amenity to be provided was in respect of repairs and maintenance of the property and payments of municipal taxes. The A.O. also noticed that the assessee has shown entire amenities charges under the head 'income from house property'. 3. The assessee was asked to explain why amenities charges should not be treated as 'income from other sources'. The assessee strongly contended that there is a nexus between the lease receipt and the amenities agreement. The claim of the assessee did not find any favour with the A.O. who went on to tax the amenities charges under the head 'income from other sources'. The assessee strongly agitated the matter before the ld. CIT(A) but without any suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim of the assessee is accordingly dismissed. 8. Ground no. 3 relates to the addition of ₹ 4,00,697/-. Facts relating to this grievance show that on verification of the TDS certificate, the A.O. found that the assessee has received rent income at ₹ 11,87,27,690/-. However, the A.O. noticed that in the computation of total income, the assessee has shown income at ₹ 11,83,26,993/-. The A.O. observed that the assessee has not reconciled the difference amount of ₹ 4,00,697/-. The A.O. added the same to the income of the assessee. The assessee carried the matter before the ld. CIT(A), but without any success. 9. Before us, the ld. Counsel for the assessee claimed that the assessee is following the cash system of accounting and, therefore, has booked only that much of rent which it has received. We do not agree with this claim of the assessee as the method of accounting is only in respect of profits and gains of business or profession or income from other sources. The reconciliation statement filed before us is also not convincing as the assessee is required to compute the income as per the provisions of the law. The undisputed fact is that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'income from other sources'. In our considered opinion, payment of municipal taxes cannot be said to be let out or expanded wholly and exclusively for the purpose of earning amenity charges, as these municipal taxes are directly related to the letting out of the property, the rental income from which is taxed is under the head 'income from house property'. We, therefore, find that the finding of the ld. CIT(A), in allowing the municipal taxes deductable as erroneous. We set aside the findings of the ld.CIT(A) and confirm that of the A.O. Ground Nos. 1 and 2 are accordingly allowed. 14. Ground No. 3 relates to the grievance that the ld. CIT(A) has erred in directing the A.O. to allow the remaining expenditure claimed in respect of cinema theatre to arrive at the business loss on cinema theatre. As mentioned elsewhere, on an income of ₹ 1,20,000/-, the assessee has claimed following expenditure: 1) Municipal taxes Rs.1,73,65,131/- 2) Bank interest Rs.42,44,745/- 3) Legal and professional fee Rs.11,61,175/- 4) Depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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