Tribunal sets aside order, directs calculation of notional income from house property.

The Tribunal allowed the appeal, setting aside the CIT(A)'s order and directing the Assessing Officer to calculate notional income from house property in accordance with the Income-tax Act. The Tribunal found that the two flats were used as a single unit for residential purposes, based on evidence of alterations and the Ward Inspector's report. The appeal was allowed on all issues, including ownership of flats, disallowance of rent for office space, and addition of interest paid for the housing loan, emphasizing the importance of proper documentation and compliance with tax laws.

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Issues:
1. Treatment of flat as two separate flats for notional income calculation.
2. Ownership of flats and computation of deemed income from house property.
3. Disallowance of 30% of rent received for office space.
4. Addition of interest paid to the bank for the housing loan.

Issue 1: Treatment of flat as two separate flats for notional income calculation
The appeal was against the order of the CIT(A) regarding the treatment of two flats as separate flats for calculating notional income. The Assessing Officer (A.O.) considered the two flats in Gaurav Plaza for deemed income from house property. The A.O. calculated the income from house property based on the rent receivable for the flats and made an addition to the income. The CIT(A) directed the A.O. to calculate the income from house property in accordance with the Income-tax Act. The Tribunal held that both flats were used as a single unit for residential purposes, as evidenced by alterations made by the assessee and the report of the Ward Inspector. The Tribunal set aside the CIT(A)'s order and allowed the appeal.

Issue 2: Ownership of flats and computation of deemed income from house property
The assessee claimed ownership of two flats in Gaurav Plaza and argued that both flats were self-occupied as a single unit. The CIT(A) was not convinced with the explanation given by the assessee and directed the A.O. to calculate the income from house property. The Tribunal found that the assessee indeed owned two flats and had used them as a single unit for residential purposes. Therefore, no notional rent could be brought to tax. The Tribunal allowed the appeal on this issue.

Issue 3: Disallowance of 30% of rent received for office space
The assessee received rental income for providing table space in an office building. The A.O. disallowed 30% of the rent for repairs and maintenance charges. The CIT(A) upheld the disallowance stating that income from renting out amenity in a property falls under "income from house property." The Tribunal found that the matter needed fresh adjudication at the A.O. level, directing a re-examination of the rent agreement in line with relevant legal decisions. The Tribunal allowed the appeal on this issue for statistical purposes.

Issue 4: Addition of interest paid to the bank for the housing loan
The assessee claimed interest on a housing loan, but the A.O. disallowed the deduction due to lack of evidence linking the loan to the rented property. The CIT(A) confirmed the disallowance, noting inconsistencies in the assessee's statements. The Tribunal found the assessee's stand inconsistent and directed the A.O. to provide another opportunity to explain the case. The Tribunal allowed the appeal on this issue for statistical purposes.

In conclusion, the Tribunal allowed the appeal for statistical purposes, addressing issues related to the treatment of flats for notional income calculation, ownership of flats, disallowance of rent, and addition of interest paid for the housing loan. The Tribunal provided detailed reasoning for each issue, emphasizing compliance with the Income-tax Act and the need for proper documentation and evidence in tax matters.

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