TMI Blog2017 (5) TMI 1357X X X X Extracts X X X X X X X X Extracts X X X X ..... airs, collection charges, electricity, water supply, salary of liftman etc. In the instant appeal, no dispute arose about payment of rent nor the tenants have filed any suit in the Court for fixation of standard rent nor the Court has passed any order fixing the rent. Respectfully following the judgement of the Hon'ble Delhi High Court in the case of H.G. Gupta and Sons (1983 (12) TMI 54 - DELHI High Court ), we dismiss ground no 1 to 4 of the assessee Clerical error in taking interest income - Held that:- The actual interest income received by the assessee can be verified from the TDS certificates. Therefore, the order of the learned CIT(A) relating to this ground of appeal is set aside and the same issue is restored to the file of the AO. We direct the AO to verify the TDS certificates and bring to tax the actual interest income as per the provisions of the Act. Needless to say, the AO would give a reasonable opportunity to the assessee to represent before him this issue. - ITA No. 3481/MUM/2014 - - - Dated:- 19-4-2017 - SHRI SAKTIJIT DEY (JUDICIAL MEMBER), AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) For The Assessee : Mr. Vimal Punmiya, AR For The Revenue : Ms. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of. ₹ 1,25,000/- Bank Charges ₹ 100/- 3.1 The AO came to a finding that none of the above expenses appear as allowable as the Act has explicitly mentioned that while calculating the income from house property, only certain allowable deductions are allowed u/s 23 and 24. In view of the above, the AO disallowed the claim of the assessee of the above expenses and recomputed the income from house property shown by the assessee 4. The assessee preferred an appeal against the order of the AO before the learned CIT(A). We find that the learned CIT(A) followed the order of the ITAT in the case of Sharmila Tagore 93 TTJ 483 and allowed the claim of maintenance charges paid by the assessee to the Society. However, in view of the specific provisions of the Act, the learned CIT(A) disallowed the claim of the assessee of brokerage expenses, legal and professional fees, bank charges and electricity charges. 5. Before us, the learned counsel of the assessee submits that brokerage expenses, legal and professional fees, bank charges and electricity charges were necessarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd the rival submissions and perused the relevant material on record. The income from a let out house property is determined as under: Gross annual value Less : Municipal taxes Net annual value Less: Deduction u/s 24 - Standard deduction - Interest on borrowed capital Income from house property Gross annual value is determined as follows: Step 1 Find out reasonable expected rent of the property Step 2 Find out rent actually received or receivable after excluding unrealised rent but before deducting loss due to vacancy Step 3 Find out which one is higher: amount computed in Step 1 or Step 2 Step 4 Find out loss because of vacancy Step 5 Step 3 minus Step 4 is gross annual value We find that from the gross annual value, municipal taxes (including service taxes) levied by any local authority in respect of the house property are deducted. Municipal taxes are deductible only if (a) these taxes are borne by the owner, and (b) are actually pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. The matter was remanded to the AO to determine whether outgoings claimed were assessee s liability against rental income. In Sharmila Tagore (supra), the Tribunal held that maintenance charges paid to housing society have to be deducted even while arriving at annual letting value of property u/s 23. Also it held that non-occupancy charges levied by housing society will have to be considered u/s 23 even while arriving at estimate of annual letting value of the property. R.J. Wood (P) Ltd. (supra) is discussed at para 7.3 infra. In Bombay Oil Industries Ltd. (supra), the issue before the Tribunal was capital gains and tax planning. This is not so in the instant case. In Neelam Cable Mfg. Co.(supra), the Tribunal held that the amount of security service charges claimed by the assessee was deductable from gross rent received while computing annual value u/s 23. Also it held that in view of proviso to section 23, entire amount of house tax actually paid by the assessee in year under consideration should be allowed as deduction. In Lekh Raj Channa (supra), the Tribunal has held in respect of collection charges that the assessee can claim only that part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (A) directed the AO to allow the claim as allowed in the past. On further appeal, the Tribunal held that in view of legal position and facts of instant case, gross rental income was required to be split into components of rent for building and rent for furniture, fixtures and additional facilities provided to tenant and while former would be assessable as income from house property from which no deduction on account of depreciation on building could be allowed, latter would be assessable as income from other sources and all outgoings such as electrical charges and depreciation of furniture and fixtures would be allowable therefrom. In Sunil Kumar Agarwal (supra), the assessee had purchased commercial space in a society which had been let out to a company. The agreement with the tenant stipulated that the property tax and the maintenance charges payable to the society would be borne by the owner as the same was duly compensated in the gross rent. In his return of income, the assessee had shown gross rent and claimed deduction on account of charges paid to the society for maintenance. The Assessing Officer disallowed the claim holding that 30 per cent deduction allowed under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of the owner in respect of leased property should be taken into consideration. As per the provisions of section 23, the annual value of property is to be determined on the basis of actual rent received by the owner. 7.2 It is a settled law that the doctrine of res judicata or estoppel by record does not apply to AO s decisions. A finding or decision of the income tax authorities in one year may be departed from in a subsequent year. It has been held so in New Jehangir Vakil Mills vs CIT 49 ITR 137 (SC) and Sanakarlinga vs. CIT 4 ITC 226, 241 (FB). Therefore we are not addressing to the decisions relied on by the learned counsel of the assessee that consistency should be made. 7.3 The learned counsel of the assessee has relied on the orders of the Tribunal as discussed at para para 7.1 here-in-above. There is only one judgment of the High Court he has relied on i.e R.J. Wood (P) Ltd. (supra). In that case, the assessee had leased out its premises to five tenants. Lease agreements were entered into in this behalf wherein rent to be received by the assessee from those tenants was specified. The tenancies became operative with effect from October, 1992. However, dispute aros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s order. On further appeal, the Tribunal, however, allowed the asssessee s claim. On appeal by the revenue, the Hon'ble High Court held that the impugned expenditure was not allowable as a deduction in assessing annual value of the property. Their Lordships held as under: 5. The annual value of the property, which is the subject of charge, was originally defined in section 23(1) as 'the sum for which the property might reasonably be expected to let from year to year'. The annual value is thus the sum for which a landlord could let the premises having regard to the conditions of the property and of the prevailing circumstances, as the language suggests the taxes are charged on the artificial or notional income. It is based on the annual value of the property. The authorities under the Act, therefore, have to make the assessment on the basis of the notional annual value. Section 23 lays down how the annual value is to be determined. Section 24 provides that income chargeable under the head Deductions from Income from house property shall, subject to the provisions of sub-section (2), be computed after making the deductions specified therein. The Legislature has us ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
