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M/s Bhansali Construction & Finance Pvt. Ltd Versus Income Tax Officer-3 (1) (2) , Mumbai

2015 (11) TMI 579 - ITAT MUMBAI

Treatment and taxability of maintenance charges received by the assessee from its tenants in the hands of the assessee - deductibility of maintenance charges paid by the assessee, in turn, to the developer by the assessee - Held that:- Maintenance charges are different from the nature of rent. These charges are not paid for the users of the property as such. These charges have been paid for making some extra use of the property, the maintenance charges are not in the nature of the rent simplicit .....

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charges, form part of the rental income, in the given facts of the case, would not be fair and justified, in our considered view. Accordingly, it is held that these maintenance charges are not part of the rental income and therefore amount of maintenance charges, received by the assessee, in these facts and circumstances of the case is not part of the rental income.

Further examined with regard to taxability of the these charges in the hands of the assessee company, these charges sho .....

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d be taxable under the head income from other sources and assessee will be eligible to make claim of the payment made under this head to M/s Tamilnadu Real Estate Pvt. Ltd. - Decided partly in favour of assessee. - ITA NO.576/Mum/2011 - Dated:- 30-9-2015 - Shri Amit Shukla, Judicial Member, and Shri Ashwani Taneja, Accountant Mem For The Revenue : Shri S. Senthi Kumaran-DR For The Assessee : Shri Vasanti B. Patel ORDER Per Ashwani Taneja (Accountant Member) The present appeal is against the orde .....

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T (A) erred in disallowing rent for amenities paid to M/ s. Tamilnadu Real Estate Pvt. Ltd. against the rent for amenities/ common facilities received from the tenant. 1.2 On the facts & circumstances of the case the learned CIT (A) erred in appreciating the fact that word maintenance charges used is nothing but word used for rent for amenities/common facilities. 2.0 On the facts & circumstances of the case the learned CIT (A) erred in levying penalty U / s. 271(1)(c) of the Income Tax A .....

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out to two tenants. 2.3. During the year, the assessee received rental income from the two different properties leased out to two different tenants namely M/s Sundaram Clayton Ltd. & Ms. Icon Clinical Resources India Pvt. Ltd. It was noted by the Assessing Officer that over and above the rental income, the assessee company has also received maintenance charges from these two tenants aggregating ₹ 3,75,280/-, during the year. Accordingly, the Assessing Officer confronted the assessee t .....

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; 9,49,499/- to the said company was debited to the profit and loss account, but the same was not claimed as an expense against income for the year. The assessee further submitted that in view of these facts, the society maintenance charges received by the assessee company for ₹ 3,75,280/- should not be taxed as rent. 2.4. However, the Assessing Officer was not satisfied with the response of the assessee. Accordingly, it was held by the Assessing Officer that the rent income has been decla .....

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received and paid by the assessee were submitted to him. The assessee also submitted copy of rental agreement with both the tenants and submitted that the addition made by the Assessing Officer was contrary to law and facts. But, Ld. Commissioner of Income Tax (Appeals) was not satisfied and convinced with the arguments of the assessee company and therefore, the addition made by the Assessing Officer was confirmed. The ld. Commissioner of Income Tax (Appeals) also rejected the alternative plea o .....

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oner of Income Tax (Appeals) that Income Tax Act provides deduction to the extent of 30% out of such rental receipt for various expenses which includes expenses on account of repairs and maintenance. As per the ld. Commissioner of Income Tax (Appeals), this deduction of 30% in itself has the element of expenditure on account of maintenance. Consequently, it was held by the ld. Commissioner of Income Tax (Appeals) that The Assessing Officer was right in taxing the receipt as rental income and not .....

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y the assessee on account of maintenance charges. It was submitted that the assessee has made payment of net excess of ₹ 9,49,499/- for which assessee should have been allowed benefit of set off against the rental income. As against this, the assessee has been made to pay tax on the amount of ₹ 3,75,280/-, which was not the income of the assessee at all. The amount of maintenance charges were received by the assessee in fiduciary capacity, on behalf of the M/s Tamilnadu Real Estate P .....

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ad income form house property. It was submitted that since there is concept of standard deduction of 30%, the assessee was not eligible for any more deduction on account of maintenance charges. He requested for upholding the orders of the lower authorities. 2.7. We have heard both the sides very carefully and gone through the material placed before us. It is noted from the copies of agreement of the assessee with the tenants that there is separate clause for payment of maintenance charges by the .....

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d/ Maintenance company, which the Tenant, unless validly disputed convenants and undertakes to pay without any default. 2.8. A perusal of above clause clarifies that the maintenance charges are different from the nature of rent. These charges are not paid for the users of the property as such. These charges have been paid for making some extra use of the property, the maintenance charges are not in the nature of the rent simplicitor. These have been called maintenance charges but these are for t .....

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