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2016 (1) TMI 722 - DELHI HIGH COURT

2016 (1) TMI 722 - DELHI HIGH COURT - TMI - Receipt of maintenance charges - liable to be taxed under the head of income from house property OR income from other sources - Held that:- As it is not open for the Assessees to claim that the express terms of agreements entered into by them should be ignored. The maintenance agreements expressly referred to the payments in question as "Maintenance and service charges". A plain reading of the agreements also indicates that the said charges were payabl .....

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ed into by the Assessee and had concluded that the consideration received pursuant to the said agreements could not be treated as rental income. - Decided against the assessee. - ITA No. 19/2016, ITA No. 21/2016 - Dated:- 6-1-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Appellants : Mr Arijit Prasad, Mr Narendra Kumar & Mr Rakesh Kumar, Advs For the Respondent : Mr P Roy Chaudhuri, Senior Standing Counsel with Mr Lakshmi Gaurung, Junior Standing Counsel ORDER 1. These appeals have been .....

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ent orders passed in respect of Assessment Year 2009-10. Both the Assessees (Appellants herein) are owners to the extent of 1/3rd share each in the house property bearing no. Block C & D, 14A Factory Road, South of Ring Road, New Delhi. 2. The controversy in the present appeals relates to the receipt of maintenance charges pursuant to an agreement dated 1st April, 2008 entered into between the Assessees and the lessee of the premises in question. According to the Assessees, the maintenance c .....

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Each of them own 1/3rd undivided share in the house property. 4. The said house property has been leased to one M/s NE & MI Consultants & Engg. Pvt. Ltd. The three owners had executed the lease deed, leasing out the said premises at a monthly rent of ₹ 2,37,500/-. In addition, each of the lessors also entered into similar but separate agreements dated 1st April, 2008 for providing maintenance services with respect to the house property (hereafter 'maintenance agreement'). T .....

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e Demised Premises is in good condition at all times during the term of the Lease Deed. 2. The First Party shall repair and renew and so far as appropriate, paint, whitewash and color the building in the Demised Premises. 3. The First Party Shall Keep the Demised Premises furnished as it is at the time of handing over possession at all times during the term of the lease deed. The First Party hereby agrees to maintain the fitting and fixture. 4. Payment of Maintenance and service charges The Seco .....

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Limited whilst TDS on sum of ₹ 9.50 lacs was deducted at the rate of 16.6%, TDS on maintenance charges had been deducted at the rate of 2%. 6. The Assessees claimed that both the receipts, i.e. on account of rent as well as the maintenance charges, were liable to be taxed under the head of income from house property. The Assessees also claimed standard deduction under Section 24 of the Act on the income by way of rental as well as the receipts on account of maintenance charges. The AO reje .....

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maintenance charges. The CIT(A) also noted that the payer had deducted tax at source on the said charges at the rate as applicable to payments made to contractors. After considering the same, the CIT(A) concluded that the maintenance charges could not be considered as rental income and accordingly upheld the assessment orders. 8. The Income Tax Appellate Tribunal also did not find any fault with the decision of the AO as well as the CIT(A) and had rejected the appeal. 9. Mr Arijit Prasad, the le .....

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