Assessee is entitled to deduction for society charges for the property given on rent

Saif Ali Khan Vs ACIT (ITAT Mumbai)- With regard to the deduction of Society charges, we find that it has also been disallowed by the AO on the ground that since a flat amount of 30% of annual value is allowed, no other deduction is allowable. However, we find that sec. 24(a) reads as under B

24. Income chargeable under the head “Income from house property” shall be computed after making the following deductions, namely:–

(a) a sum equal to thirty per cent of the annual value;”

Thus, from the above, it is clear that a sum equal to 30% is allowable from the annual value so determined u/s.23(1) of the Act. In other words, the deductions u/s. 24 are to be given from, and calculated on the basis of, the annual value so determined.

15. In the cases relied on by the ld. counsel for the assessee B

16. In Sharmila Tagore vs. Jt. CIT (Mumbai) (2005) 93 TTJ (Mum) 83, it has been observed and held vide para 3 of the order as under B

“3. The assessee is in further appeal before the Tribunal. As regards the maintenance charges we find that the issue is covered in favour of the assessee by the order of the Tribunal dt. 15^th Nov., 2000, in the case of Bombay Oil Industries Ltd. in ITA 550/Mum/2000. In this case, the decision of the Delhi Bench of the Tribunal in the case of Neelam Cable Mfg. Co. vs. Asst. CIT (1997) 59 TTJ (Del) 474: (1997) 63 ITD 1 (Del), Lekraj Channa vs. ITO (1990) 37 TTJ (Del) 297 and the decision of the Bombay Bench of the Tribunal in the case of Blue Mellow Investment & Finance (P) Ltd. (ITA No.1 757/Bom/1 993 dt. 6^th May 1993) were followed and it was held that the maintenance charges have to be deducted even while arriving at the annual letting value of the property under s. 23.   Following the said order, we    hold that the maintenance charges have to be deducted even while determining he annual value of the property under s. 23.”

Shri Saif Ali Khan Vs. Asst. Commissioner. of Income Tax

ITAT Mumbai

I.T.A. No. 1653/Mum/2009

(A.Y. 2004- 05)

ORDER

PER D.K. AGARWAL, JM:

This appeal preferred by the assessee is directed against the order dated 23-01-2009 passed by the ld. CIT(A) for the asst. year 2004-05.

2. Briefly stated facts of the case are that the assessee is a film artist and also derives income from house property and other sources. The return was filed declaring a total income of Rs. 3,41,46,040/-. However, the assessment was completed at an income of Rs. 3,44,38,540/- including dis-allowance of deduction of brokerage paid, Society charges & municipal taxes from the income from house property and dis-allowance of part electricity expenses vide order dated 04- 09-2006 passed u/s. 143(3) of the I.T. Act, 1961 (“the Act”). On appeal, the ld. CIT(A), while confirming the dis-allowance made by the AO, dismissed the assessee’s appeal.

3. Being aggrieved by the order of the CIT(A), the assessee is in appeal before us.

4. Ground no.1 is against the sustenance of disallowance of brokerage paid Rs.37,780/- against rent received from letting out of property at Oxford Towers, Andheri, Mumbai.

5. At the time of hearing, the ld. counsel for the assessee submits that he does not want to press the above ground, which was not objected by the ld. D.R.

6. That being so and in the absence of any supporting material including rent deed    and receipt of brokerage paid, the ground taken by the assessee is, therefore, rejected being not pressed.

7. Ground no. 2 is against the sustenance of disallowance of municipal taxes and Society charges of Rs.1,36,066/- out of income from house property.

8. Briefly stated facts of the above issue are that out of income from house property known as Oxford Towers, Andheri, Mumbai, the assessee claimed deduction of municipal taxes and Society charges of Rs.1,36,066/- and in support reliance was also placed on the decisions in

(1) Seth Raj Channa vs. ITO (1990) 37 TTJ Del. 297,

(2) Realty Finance & Leasing Pvt. Ltd. 5 SOT 348 and

(3) Nandita Banerjee vs. ITO – ITA No.1360/Mum/2000.

However, the AO was of the view that the method of computation has been substituted by the Finance Act, 2001, w.e.f. 01-04-2002 and the decisions relied upon by the assessee are all relating to the assessment years prior to asst. year 2002- 03 and hence not applicable and as such he disallowed the claim of deduction of brokerage & Society charges from the annual value of the property. On appeal, the ld. CIT(A), while agreeing with the views of the AO, observed that u/s.24 a flat amount of 30% of annual value is allowed as deduction besides municipal taxes and hence no further allowance is permissible once a fictional deduction has been allowed   along   with allowance on account of specific items like municipal taxes etc., rejected the claim of the assessee.

9. At the time of hearing, the ld. counsel for the assessee, while reiterating the same submissions as submitted before the AO and ld. CIT(A), further submits that in view of the decisions cited before the AO, the deduction of municipal taxes & Society charges are allowable and hence the same be allowed.

10.On the other hand, the ld. D.R. supports the orders of the AO and the CIT(A).