Rent Paid to Earn Subletting Income Deductible Under Section 57: ITAT Delhi

Suman Devi Vs ITO (ITAT Delhi)

AO ACCEPTED ₹13.20-LAKH SUB-RENT BUT DENIED EVERY RUPEE SPENT TO EARN IT-₹6.90-LAKH DEDUCTION ALLOWED u/s 57

The Delhi ITAT has held that where an assessee takes a property on rent, sub-lets it & offers the receipts as income from other sources, the rent paid to the owner cannot be denied merely because the assessee is not the property’s owner. Reasonable expenditure necessary for maintaining the property must also be allowed u/s 57(iii). Against the assessee’s claim of ₹9.90 lakh, the Tribunal allowed deductions aggregating to ₹6.90 lakh.

Facts of the case

The assessee, Mrs. Suman Devi, filed her return for AY 2023-24 on 31.08.2023 declaring total income of ₹5,21,748.

During the relevant year, she received rental income of ₹13,20,000 from a property taken by her on rent & subsequently sub-let to another person.

Since the assessee was not the owner of the property, she offered the receipts under the head “Income from Other Sources” rather than “Income from House Property”.

Against the rental receipts, the assessee claimed expenditure of ₹9,90,000 u/s 57.

The case was selected for scrutiny under CASS specifically to verify the genuineness of these expenses. Notices u/ss 143(2) & 142(1) were issued & the assessee furnished information in response.