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of <h1>High Court distinguishes service charges from property letting income, allows depreciation on lifts and transformers</h1> <h3>Commissioner Of Income-Tax Versus Model Manufacturing Co. Pvt. Limited</h3> The High Court ruled in favor of the assessee, determining that services provided to tenants are distinct from property letting activities. Service ... Depreciation, Income From Other Sources, Property Issues involved: The judgment addresses the following issues: 1. Whether services provided by the assessee to tenants are separate from property lettingRs.2. Whether service charges are part of house property income or income from other sourcesRs.3. Whether depreciation on lifts and transformers is allowable under the Income-tax ActRs.Issue 1 - Services provided to tenants: The Tribunal referred the question of whether services like electricity, lifts, water supply, maintenance, and watch and ward facilities provided by the assessee to tenants are distinct from property letting. The High Court relied on a previous decision and answered in the affirmative, stating these services are separate activities not incidental to property letting.Issue 2 - Treatment of service charges: The Tribunal questioned if service charges realized should be considered part of house property income or income from other sources. Citing a prior case, the High Court ruled in favor of the assessee, stating that service charges are not part of house property income assessable under section 22 but fall under the head 'Income from other sources'.Issue 3 - Depreciation on lifts and transformers: The Tribunal sought clarification on whether depreciation on lifts and transformers is allowable under the Income-tax Act. The High Court, considering the answer to the second question, affirmed that depreciation on lifts and transformers is permissible under section 57 of the Income-tax Act.The judgment concluded by stating that the controversies raised in the first two questions were settled by a previous decision and ruled in favor of the assessee. The third question was answered affirmatively based on the response to the second question. The judgment did not award costs to either party. Another judge on the panel agreed with the decision.
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