While calculating annual rental value for Income from House Property, expenses like brokerage, electricity expenses, legal expenses and bank charges would not be allowed as permissible expenditures as these expenses are not covered under sections 23 and 24 of Income Tax Act, 1961 as permissible expenditure.
Full Text of the ITAT Order is as follows:-
This is an appeal filed by the assessee. The relevant assessment year is 2009-10. The appeal is directed against the order Commissioner (Appeals) – 23, Mumbai and arises out of assessment made under section 143(3) of the Income Tax Act, 1961 (the ‘Act’).
2. The grounds of appeal filed by the assessee read as under :–
1. The learned Commissioner (Appeals) has grossly erred in confirming the dis allowance of brokerage of Rs. 5,00,565 from the annual letting value of the let out property at Maker Chamber, VI, Nariman Point.
2. The learned Commissioner (Appeals) has grossly erred in confirming the dis allowance of electricity expenses of Rs. 27,228 from the annual letting value of the let out property of Dada Manzil.
3. The learned Commissioner (Appeals) has grossly erred in confirming the dis allowance of legal and professional expenses of Rs. 1,25,000 from the annual letting value of the let out property of Dada Manzil.
4. The learned Commissioner (Appeals) has grossly erred in confirming the disallowance of bank charges of Rs. 100 from the annual letting value of the let out property of Dada Manzil.
5. The learned Commissioner (Appeals) has erred in not considering the ground of the assessee in respect of interest income which has been wrongly taken as Rs. 7,89,198 instead of Rs. 2,71,591.
6. We begin with ground number 1 to 4 of the appeal as they address a common issue. Briefly stated the facts are that the assessee filed his return of income for the assessment year 2009-10 on 19-8-2009 declaring total income of Rs. 64,11,000. The assessee has shown income from house property and other sources. The assessing officer (AO) on perusal of the computation of income found that the assessee has claimed the following expenditures as allowable deductions in respect of the income from the respective house properties —
