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Case Law Details

Case Name : LPR Company Pvt Ltd Vs ACIT (ITAT Delhi)
Appeal Number : ITA No. 2375/Del/2017
Date of Judgement/Order : 29/05/2023
Related Assessment Year : 2012-13
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LPR Company Pvt Ltd Vs ACIT (ITAT Delhi)

ITAT Delhi held that maintenance charges not connected to the rental income cannot be considered as part of rental income. Accordingly, maintenance charge collected is taxable as business income.

Facts- The assessee is a resident corporate entity. The source of income of the assessee is rental and other income received from letting out building owned by it.

In course of assessment proceedings, AO noticed that the assessee had offered rental income of Rs.73,21,536/- as income from house property. Whereas, the maintenance income of Rs.7,68,688/- received from the building let out has been treated as business income. AO was of the view that since, the rental income as well as the maintenance income was received by the assessee from the building let out, they cannot be given different treatment, only because, the assessee has received such income under two separate agreements. Thus, ultimately, he concluded that the maintenance income received by the assessee partakes the character of income from house property. Accordingly, AO included it as part of rental income and brought to tax as income from house property.

Conclusion- Held that the maintenance charges are no way connected to the rental income. Rather, they are for certain additional facilities provided to the tenants, which are unconnected to leasing out the tenanted premises. These facilities, even, could have been provided by a third party. Therefore, in our view, the maintenance charges has no connection with the rental income, hence, cannot be considered to be a part of rental income to treat it as income from house property.

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