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of <h1>Appeal allowed for deduction of society maintenance charges to determine property's annual letting value.</h1> <h3>Sopariwala Exports Versus ACIT, CC-8 (1), Mumbai.</h3> Sopariwala Exports Versus ACIT, CC-8 (1), Mumbai. - TMI Issues Involved:1. Disallowance of society maintenance charges of Rs. 68,18,580/- by the Assessing Officer (AO).2. Treatment of society maintenance charges as part of 'Income from House Property' instead of adding to total income.Issue-Wise Detailed Analysis:1. Disallowance of Society Maintenance Charges:The assessee, a partnership firm engaged in trading and letting out commercial premises, filed a return of income for the A.Y 2017-18. The AO scrutinized the return and disallowed the society maintenance charges of Rs. 68,18,580/- claimed by the assessee. The AO opined that the assessee was only eligible for deductions under Section 24(a) of the Income Tax Act, which includes municipal taxes and 30% standard deduction, and no additional claims were permissible.The AO issued a show cause notice for disallowing the maintenance expenses, to which the assessee responded with detailed explanations and judicial precedents. However, the AO was not satisfied and maintained the disallowance, assessing the total income at Rs. 33,81,77,070/-.2. Appeal Before CIT(A) and ITAT:The assessee appealed to the CIT(A), who upheld the AO's decision, stating that the action of the AO was tenable. The assessee then appealed to the ITAT, arguing that the CIT(A) erred in confirming the addition despite favorable orders in similar cases involving the assessee's sister concerns.At the ITAT hearing, the assessee's representative argued that society maintenance charges should be allowed in addition to the deduction under Section 24, as these charges are mandatory regardless of whether the property is let out or vacant. The representative cited several judicial decisions supporting the claim that society maintenance charges should be deducted when determining the annual letting value (ALV) of the property.Judicial Precedents and Tribunal's Decision:The ITAT considered various judicial precedents, including:- Neelam Cable Mfg. Co. v. Asstt. CIT (1997)- Lekraj Channa v. ITO (1990)- Blue Mellow Investment and Finance (P) Ltd (1993)- Sharmila Tagore v. JCIT (2005)- DIT (International Taxation) v. Vinod Arora (2012)- Realty Finance and Leasing Pvt Ltd v. ITO (2006)- Asha Ashar v. ITO (2017)These cases established that society maintenance charges should be deducted when determining the ALV under Section 23 of the Income Tax Act. The ITAT found the assessee's submissions realistic and supported by judicial decisions, which could not be overlooked.Conclusion:The ITAT concluded that the society maintenance charges must be allowed as a deduction. The order of the CIT(A) was set aside, and the AO was directed to delete the addition and allow the grounds of appeal in favor of the assessee. The appeal filed by the assessee was allowed.Order Pronounced:The order was pronounced in the open court on 14.02.2022.
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