License fees deemed as income from property, depreciation disallowed on service assets, upheld by Tribunal

The Tribunal upheld the CIT(A)'s order, dismissing appeals by both the Revenue and the assessee. The treatment of license fees as income from house property and the disallowance of depreciation on assets used in providing services were deemed appropriate under the Income Tax Act. The assets were considered to be used for generating income from house property, and allowing depreciation would result in double deduction. Therefore, the appeals on both issues were dismissed.

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Issues:
1. Depreciation on assets used in providing services.
2. Treatment of license fees as income from house property instead of income from other source.

Depreciation on assets used in providing services:
The case involved appeals by both the Revenue and the assessee regarding the order of the ld. CIT(A) for Assessment Year 2005-06. The assessee, engaged in providing infrastructure services for townships, had filed a return of income showing a loss. The AO treated rent received as license fee as income from other sources instead of house property income and disallowed certain deductions. The CIT(A) considered the license fee as income from house property and service charges as business income. However, the claim for depreciation on assets used in providing services was disallowed. The CIT(A) upheld the disallowance, stating that as the appellant had already claimed deductions for repairs and maintenance, depreciation on the same infrastructural facilities could not be claimed. The Tribunal found no infirmity in the CIT(A)'s order, noting that the assets were used for generating income from house property and the claim of depreciation would lead to double deduction. Therefore, the appeals on this issue were dismissed.

Treatment of license fees as income from house property:
The issue of treating license fees as income from house property instead of income from other sources was also addressed. The CIT(A) directed the assessing officer to assess the license fees from open land with common facilities as income from house property based on the principle of consistency. The Tribunal upheld the CIT(A)'s decision, emphasizing that the assets were put to use for generating income and should be considered as part of earning income from house property. The license fees and service charges were deemed to be part of the income from house property, not income from other sources. The appeals by both parties were dismissed, affirming the treatment of license fees as income from house property.

In conclusion, the Tribunal upheld the CIT(A)'s order on both issues, dismissing the appeals by the Revenue and the assessee. The treatment of license fees as income from house property and the disallowance of depreciation on assets used in providing services were found to be appropriate under the provisions of the Income Tax Act.

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