Premkumar Menon Vs ACIT (ITAT Chennai)
Conclusion: Once the maintenance charges were attributable to the letting out services provided, the same derived from providing services was to be considered under the head “income from other sources” and not “income from house property”.
Held: AO considered the maintenance charges as received by the assessee from the premise of the rent agreement as “income from house property” and assessed the same u/s. 24 of the Income Tax Act. On appeal, CIT (A) confirmed the action of the AO in making the addition of maintenance charges received on let out property amounting to Rs. 37,98,900/- as assessable under the head “income from house property” as against claimed by assessee under the head “income from other sources”. It was held that services provided for the charge of maintenance charges was clearly distinguishable from the rental receipt for renting out the portion of the property and it was for only providing services. Once, these maintenance charges were attributable to the services provided, the same derived from providing services was to be considered under the head “income from other sources” as claimed by the assessee.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-5, Chennai, in ITA No.75/CIT(A)-5/2018-19 dated 05.09.2019 for the Assessment Year 2016-17. The Assessment was framed by Asst. Commissioner of Income Tax, Non Corporate Circle-17(1), Chennai u/s. 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide order dated 29.12.2018.
2. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the A.O in making addition of maintenance charges received on let out property amounting to Rs. 37,98,900/- as assessable under the head “income from house property” as against claimed by the assessee under the head “income from other sources”. For this, the assessee has raised various grounds which are argumentative nature and exhausted and hence, need not be reproduced.
3. The brief facts of the case are that the assessee owns two floors i.e., 8th & 9th floors of the commercial property known as Menon Eternity at No.165, St. Mary’s Road, Alwarpet, Chennai. The assessee admitted the rent received pertaining to the ownership of these two floors under the head “income from house property” on the basis of annual letting value of the space. The assessee also declared maintenance charges from these premises as “income from other sources” and the details are given in assessment order and the same is being reproduced for the sake of convenience as under:
