Compensation received for providing amenities is taxable as income from house property

Star Gold Pvt. Ltd. Vs. Dy. CIT (ITAT Mumbai)

A similar issue has been considered by the ITAT, SMC Bench, Mumbai in assessee’s own case for assessment year 2008-09 in ITA No. 349/mum/2015 dated 22-6-2016. The co-ordinate bench of this Tribunal, under similar facts, has held that receipts towards amenities are to be considered as part of rental income. However, the expenses incurred towards security service and pantry services are not connected to the rental income and hence, they should be deducted from the receipts from amenities. The relevant pat of the order of the co-ordinate bench is extracted below:–

“6. I further notice that the assessee has let out the two story building to only one tenant. The nature of amenities claimed to have been provided consisted of security services, building maintenance, car parking facility, pantry services. The electricity expenses incurred by the assessee are being reimbursed by the tenant. I notice that the security services and pantry services are not germane to the letting of building, but other services are part and parcel of letting of building. Hence the decision rendered by the Hon’ble Supreme court in the case of Shambu Investments (supra) shall squarely apply to the assessee. I also agree with the learned Departmental Representative that the principle of res judicata shall not apply to income tax proceedings.

7. Accordingly I am of the view that the predominantly, the receipts towards amenities are to be considered as part of rental income only. However, as stated earlier, the expenses incurred towards security services and pantry services are not connected to the rental income and hence they should be deducted from the receipts towards amenities. Accordingly the only net receipts after deduction of above said income should be considered as part of rental receipts. I order accordingly.”