Appeal partially allowed, fair rental value not taxable; repairs expenses disallowed.

The Tribunal partly allowed the appeal, ruling in favor of the assessee by deleting the addition made on the fair rental value determination for a property under construction used for business purposes, emphasizing it was not taxable as house property. However, the disallowance of repairs and maintenance expenses for the same property was upheld, as the expenses were required to be capitalized.

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Issues:
1. Addition made on the determination of fair rental value of a property.
2. Disallowance of repairs and maintenance expenses.

Analysis:

Issue 1: Addition made on the determination of fair rental value of a property
The assessee's appeal challenged the addition made by the Assessing Officer (AO) regarding the determination of fair rental value under section 23(1)(a) of the Act for House No. 125, Mahaveer Nagar-1, Kota. The AO observed that the property was shown in the fixed assets of the assessee as a part of the business assets, with construction ongoing. The AO conducted an on-spot inquiry and found that the property was being used by two individuals, but the assessee explained that it was for security purposes and not rented out. The AO determined the fair rental value based on a similar property let out by the assessee. However, the Tribunal held that since the property was under construction and used for security by the assessee's staff without rent, it cannot be considered as house property for taxation under section 22 of the Act. The Tribunal emphasized that the property was claimed as a business asset and used for business purposes, thus deleting the addition made by the AO.

Issue 2: Disallowance of repairs and maintenance expenses
The second ground of appeal by the assessee was related to the disallowance of repairs and maintenance expenses amounting to &8377;32,717. The AO disallowed this expense for two properties, including the one mentioned above. The Tribunal upheld the disallowance for the property assessed under income from house property, as a 30% deduction was already allowed under section 24 of the Act. However, concerning the property under construction, the Tribunal found that the addition made by the AO was deleted, and repairs and maintenance expenses were to be capitalized. As a result, the Tribunal dismissed the appeal on this ground, upholding the disallowance of repairs and maintenance expenses for the property in question.

In conclusion, the Tribunal partly allowed the appeal of the assessee, deleting the addition made on the fair rental value determination while upholding the disallowance of repairs and maintenance expenses for the relevant properties.

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