TMI Blog2021 (1) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds of appeal of the Assessee. - ITA No. 7001/Mum/2018 - - - Dated:- 20-10-2020 - Shri Rajesh Kumar, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Appellant : Shri Madhur Agarwarl Advocate For the Respondent : Shri Amit Pratap Singh, CIT DR ORDER PER PAVAN KUMAR GADALE - JM: The assessee has filed the appeal against the order of the Ld. Commissioner of Income Tax (Appeals)-28, Mumbai passed u/s 143(3) and 250 of the Income Tax Act, 1961. The assessee has raised the following grounds of appeal: 1. The CIT(A) erred in upholding the addition of ₹ 37,97,657/- towards BPT lease rent made by the A.O while computing the income under the head Income from House Property. 2. The CIT(A) erred in upholding the annual value of the property determined by the A.O without considering the lease rent paid by the Appellant firm to BPT. 3. The appellant craves leave to add, alter and or amend all any foregoing grounds of appeal . 2. The brief facts of the case are that the assessee is a partnership firm and has income from House property interest on deposits and income from other sources. The assessee firm filed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, the Ld. AR has submitted that the CIT(A) has erred in confirming the action of the assessing officer and overlooked the major facts and the legal position that the assessee is only a lease holder of the property and has to pay the lease rent to Bombay Port Trust (BPT) and the assessee receives licence fees as per the agreements with various tenants. The Ld. AR referred to the submissions made in the assessment proceedings and before the CIT(A), in particular at page 6 para 3.1 of the CIT(A) order. The contentions of the Ld. AR are that the annual value of the property shall be determined u/s 23(1)(b) were the actual rent is received or receivable by the assessee. The Ld. AR supported his arguments with the judicial decisions and prayed for allowing the assesse appeal. 4. Contra, he Ld. DR relied on the orders of the CIT(A). 5. We heard the rival submissions and perused the material available on record.The sole matrix of the disputed issue is in respect of claim of deduction of lease rent paid by the assessee to Bombay Port Trust (BPT). Whereas, the assessee firm has claimed the lease rent paid as deduction from the rental income/licence fee received from its tenants. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose about payment of the said rent. Said premises were in a multi-storey building and maintenance charges were payable by the occupier to the agency/builder maintaining the building. The tenants claimed that the rent payable by them to the assessee included maintenance charges and, therefore, it was the obligation of the assessee to pay the maintenance charges. The assessee, on the other hand, wanted these tenants to pay the maintenance charges exclusive of contractual rent. Because of this dispute, the tenants filed a suit in Small Causes Court for fixation of standard rent. In that case, the Small Causes Court passed an interim order in 1994 fixing the rent at ₹ 30,000 per month, which was less than the contractual rent agreed upon between the parties in the rent agreement. Since the rent was fixed on lump sum basis at ₹ 30,000 per month, the assessee had to pay the maintenance charges, which were claimed as deduction. The Assessing Officer disallowed the claim on the ground that as per the lease agreement these maintenance charges were to be borne by the tenants. The Commissioner (Appeals), however, allowed this claim which view of the Commissioner (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax : In this matter, we are required to consider the scheme of taxation of income from house property. Section 22 says that the measure of income from house property is its annual value. The annual value is to be decided in accordance with section 23. Sub-section (1) of section 23, by virtue of the amendment with effect from the assessment year 1976-77, has two limbs, namely, clauses (a) and (b). Clause (a) states that the annual value is the sum for which the property might reasonably be expected to be let from year to year. Clause (b) covers a case where the property is let and the actual rent is in excess of the sum for which the property might reasonably be expected to be let from year to year. In other words, insertion of clause (b) by the Taxation Laws (Amendment) Act, 1915, covers a case where the rent for a year actually received by the owner is in excess of the lawful rent which is known as the fairrent or standard rent under the rent control legislation. The provisions of section 23(1)(a) of the Income Tax Act apply both to owner-occupied property as also to property which is let out and the measure of valuation to decide the annual value is the standard re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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