9911796707
TMI Blog2016 (9) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial questions of law which really raise only one point. i) Whether in the facts and circumstances of the case the maintenance charges could be included as part of rent? ii) Whether in the facts and circumstances of the case interpretation given to Section 23 of Income Tax Act, 1961 is correct? iii) Whether in the facts and circumstances of the case the maintenance charges given by the sub sub licensees to builder can be included as part of rent? iv) Whether in the facts and circumstances of the case orders Annexures A-1 to A-3 are sustainable in law? 3. The appellant is a sub-licencee of an apartment admeasuring 367 sq. feet in a commercial building. The assessee entered into a sub-sublicence agreement dated 03.05.2000 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Area) total monthly rent is Rs. 14,680/- (Rupees Fourteen thousand six hundred eighty only) of the area comprised in the Demised Premises, the said rent be paid quarterly in advance. The first payment, however, will be for two months (May & June, 2000). (b) In addition to the monthly rent, monthly and proportionately for any part of the month, all maintenance charges payable to the Builders, M/s Bharat Hotels Limited, as per their current bills in respect of the Demised Premises. Presently the maintenance charges fixed by the Builders are Rs. 14.22 (Rupees fourteen and paisa twenty two only) per sq. ft. per month. All reasonable and future enhancements, if any, will also be to the Sub-Sub-Licencee account. Any abnormal increase will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther words sub-clause (b) requires the sub-sub-licencee to pay the assessee all the maintenance charges payable to the builder. It does not require the sub-sublicencee to pay the same to the builder. 6. Mr. Jhingan submitted that as a matter of fact, the sub-sublicencee has been paying the maintenance charges to the builder. 7. If that is so, it is pursuant to an understanding between the assessee and the sub-sub-licencee and not as per the terms of the agreement. The sum of the rent and the maintenance charges are, therefore, payable by the sub-sub-licencee to the assessee. That then is the annual value of the property being the actual rent received or receivable by the assessee. 8. In any event the maintenance charges ought to be inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er according to the method of accounting regularly employed by him) in determining the annual value of the property of that previous year in which such taxes are actually paid by him. Explanation.-For the purposes of clause (b) or clause (c) of this sub-section, the amount of actual rent received or receivable by the owner shall not include, subject to such rules as may be made in this behalf, the amount of rent which the owner cannot realise. (2) Where the property consists of a house or part of a house which- (a) is in the occupation of the owner for the purposes of his own residence; or (b) cannot actually be occupied by the owner by reason of the fact that owing to his employment, business or profession carried on at any other p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch taxes are actually paid by the assessee. Thus if the taxes are not paid they cannot be deducted. In that event they remain included in the annual value of the property. The proviso does not include the maintenance charges paid by the assessee. 10. If the maintenance charges are not included in the rent, it would enable an assessee to avoid paying tax on the true annual value of the property. Under section 23(1) for the purpose of section 22 the annual value of the property shall be deemed to be the sum for which the property might reasonably be expected to let from year to year. The amount of rent would also be dependent upon the common facilities of a building. The better the facilities, qualitatively and or quantitatively, the higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the property for the purpose of section 23 by the simple expedient of providing for the payment of the maintenance charges etc. and the rent separately. 14. The maintenance charges must be included as part of the rent for the purpose of computing the annual value of the property. The assessee is not prejudiced thereby in any event. We are informed that the amounts received under the sub-sub-licencee had been brought under the head "Income from house property". Section 24 provides that the income chargeable under the head "Income from house property" shall be computed after making the deductions specified therein. Under clause (a) of Section 24, a sum equal to thirty percent of the annual value is liable to be deducted. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
