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DCIT – 24 (2) , Mumbai Versus Yogen D. Sanghvi

2017 (12) TMI 295 - ITAT MUMBAI

Deduction of maintenance charges and non-occupancy charges paid to the society, from the rent received by the assessee - Held that:- We find that Ld. CIT(A) while deciding these grounds have taken into consideration the facts of the present case as well as judgments passed by the Coordinate Bench of Hon’ble ITAT in the case of Sharmila Tagore Vrs. JCIT [2004 (6) TMI 591 - ITAT MUMBAI] wherein it has been held that the maintenance charges and non-occupancy charges paid to the society is to be ded .....

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fore, the Ld. CIT(A) has rightly concluded that the amount of ₹ 81,59,061/- received by the assessee in 'settlement of the dispute was rightly taken as compensation for the impairment of the right of more enjoyment. It was also rightly concluded that since the immovable property itself is capital in the hands of the assessee, therefore the right to 'more enjoyment' of this property should also be capital in nature. - Decided against revenue - I.T.A. No. 4776/Mum/2014 - Dated:- 1-11-2017 - .....

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ow the claim of deduction of Common Area Maintenance Charges of ₹ 11,36,069/-, while computing the Annual Letting Value ignoring the fact that the said expenses are not allowable u/s 23 while computing the Annual Letting Value. 2. On the facts and in the circumstances of the case and in law, the Ld. C.I.T. (A) erred in directing the Assessing Officer to allow the claim of deduction of Common Area Maintenance Charges of ₹ 11,36,069/- , while computing the Annual Letting Value ignoring .....

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had disallowed the proportionate expense and treated the same as income in Asst. Year 2011 -2012 and offered the same for taxation. 4. On the facts and in the circumstances of the case and in law, the Ld. C.I.T. (A) erred in directing the Assessing Officer to treat the amount of ₹ 81,59,061/- received from K Raheja Universal Construction Pvt. Ltd., as capital receipt and exempt it from tax, ignoring the fact that the amount of ₹ 81,59,061/- was compensation received by the assessee .....

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ficer to treat the amount of ₹ 81,59,061/- as capital receipt ignoring the decision of the Hon'ble Madras High Court in the case of CIT Vs Deepak Kumar Agarwal (2000) 244 ITR 448 wherein it was held that lump sum payment received as compensation is in the nature of revenue receipt 7. On the facts and in the circumstances of the case and in law, the Ld. C.I.T. (A) erred in directing the Assessing Officer to treat the amount of ₹ 81,59,061/- as capital receipt ignoring the decision .....

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ess of financial services. Apart from that the assessee also derived income from house property, capital gain and also from other sources i.e. interest income. The return of income was filed on 15.10.10, declaring total income of the assessee at ₹ 4,27,1,350/-. Subsequently, the case of the assessee was selected for scrutiny and after serving statutory notices and seeking reply of assessee, the AO passed assessment order u/s 143(3) of the I.T. Act, thereby making additions. Aggrieved by th .....

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o the society, from the rent received by the assessee, therefore we thought it fit to dispose of the same through the present common order. 4. We have heard the counsels for both the parties and we have also perused the material placed on record as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised by the revenue in para no. 2.1 to 2.3 of its .....

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luding Municipal Taxes) charges. In other words, CAM charges is payable by the Appellant. b. In the return, the Appellant has claimed CAM charges alongwith municipal taxes as deduction from the rent for computing the annual value of the premises let out. C. The basis of Annual letting value is to be computed on the basis of rent received or receivable u/s 23(1)(b). The. Muncipal Taxes and other common maintenance charges which are to be borne by the owner out of such rent, the ALV is to be compu .....

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p; other charges are deductible from rent while calculating the Annual Letting value of the property. g. The Ahemdabad Tribunal in case of J.B. Patel & Co. (Co-owners) Vrs DCIT (2009) 118 ITD 556 (Ahd) para 5.2 held that What s. 22 attempts to assess is the annual value of the property consisting of any building or land appurtenant thereto, of which the appellant is the owner,, and which has not been put to use for the purposes of its business or profession by it. The rent being charged by t .....

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is incurred, by the tenant or tenants (collectively), with the landlord having no locus standi or role therein, so that who incurs the same in the first instance, is only a matter of mutual arrangement or convenience and, thus, of no consequence where the bona fides thereof are, as in the present case, not'in doubt. The rent being charged by the appellant, which represents the measure of its annual value, would, being only decided under the said arrangement, in such a case, stand correspond .....

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nt/user of the relevant property and, therefore, can only be considered as having been included - at the said amount, i.e., at cost, by the two parties in the reckoning/determining of the same (rental). h. The'Muribai Tribunal in case of Realty Finance & Leasing (P.) Ltd. vs. ITO (2006) 5 SOT 348 (Mum) held that society charges paid by appellant in respect of its let out properties are allowable while computing annual value. This was followed in case of ITO vs. Farouk D. Vevaina (2009) 1 .....

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rmined with rexe to actual rent. k. The Murnbai Tribunal in case of Sharmila Tagore vs. JCff (2005) 93 UJ 483 (Mum) held that maintenance charges and non-occupancy charges paid to the society is to be deducted from the rent received by the Appellant. L. The appellant therefore submits that the expenses may be deducted while computing the net annual rental, income under section 22. 2.3. I have carefully considered the submissions made by the appellant and the impugned assessment order on this iss .....

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ed by revenue authorities and hearing the parties at length, we find that Ld. CIT(A) while deciding these grounds have taken into consideration the facts of the present case as well as judgments passed by the Coordinate Bench of Hon ble ITAT in the case of Sharmila Tagore Vrs. JCIT wherein it has been held that the maintenance charges and non-occupancy charges paid to the society is to be deducted from the rent received by the assessee. Moreover, no new facts or contrary judgments have been brou .....

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er-related and relates to challenging the order of Ld. CIT(A) in directing the AO to treat the amount of ₹ 81,59,061/- received from M/s K. Raheja Universal Construction Pvt. Ltd as capital receipt, therefore we thought it fit to dispose of the same through the present common order. 6. We have heard the counsels for both the parties and we have also perused the material placed on record as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is nece .....

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the applicable legal position. The Assessing Officer was of the view that the compensation has been-paid for probable loss of higher rental receipts to be received by letting the said unit to IMITES firm and therefore the compensation received by the appellant is definitely is of revenue nature. The Assessing Officer further opined that the loss on account of receiving of lesser rental income by letting out the said unit to an IT firm is clearly revenue loss. The ownership and right in the said .....

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is a partnership firm, in which Mr. Yogen Sanghavi, the appellant was a partner & it owned a vacant plot located at Goregaon, Western Express Highway. Subsequently, the plot was given for redevelopment by MIs S.C. Brothers on 28.11.2005 to M/s K. Raheja Universal Construction Pvt. Ltd. for developing an iT Park. As per the agreed terms MIs K. Raheja Univeral Construction Pvt. Ltd. had settled the consideration as follows: C. ₹ 4.80 Crs by way of cheque d. 50% of the constructed area to .....

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wn by the Government Of Maharashtra Directorate of Industries Authorities as set out in G.R. dated 03.05.2007, was that the building would be treated as IT Park Building, only if 50% of the total area constructed is utilized for Financial Services and the balance 50% for purpose of I.T. Services. The Local Authority was only concerned about the overall distribution between I.T. & Financial Services and unit wise commitment was not required. To fulfill this conditions the members of the build .....

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Unit no. 302 for Financial Services, he was surprised to learn that it was not possible since M/s K Raheja Universal Pvt Ltd had already utilized the slot of Financial Services which belonged to him, because of which Mr. Sanghavi could let out his unit only for IT/ITES purpose, otherwise the status of IT park would have been lot. The matter was taken up with M/s K Raheja Universal Pvt Ltd and it was settled that they would compensate Mr.•Yogen D Sanghavi for a sum of ₹ 81.59 Lacs for .....

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property. The amount of .81,59,061/- received by.the appellant in 'settlement of this dispute, can therefore be treated as compensation for the impairment of this right. Since the immovable property itself is capital in the hands of the appellant, the right to 'more enjoyment' of this property should also be capital in nature. Thus in the facts of the case, it is capital receipt as held by the Bombay High Court in the case of CIT(V) Abhasbhoy A Dehgamwalla and hence not eligible to t .....

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