Common area maintenance and mall operating expenses cannot be mechanically apportioned to house property income; fresh property tax claim may be verified.

Common area maintenance and other mall , when incurred for contractual upkeep, tenant services, marketing, security and administration, were held not to be apportionable to house property income merely because the assessee had receipts under multiple heads; the further disallowances were therefore unsustainable, subject to the limited relief already retained by the Commissioner (Appeals). The appellate authority was also permitted to entertain and direct verification of a fresh claim for property tax arising from the record, so the direction for verification was upheld.

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Issues: (i) whether repairs and maintenance expenditure attributable to common area maintenance could be disallowed as relatable to house property income; (ii) whether legal and professional charges, employees remuneration, advertisement and sales promotion expenses, miscellaneous and general expenses, and security charges could be apportioned to house property income on a proportional basis; and (iii) whether the appellate authority could entertain and direct verification of an additional claim of deduction for property tax.

Issue (i): whether repairs and maintenance expenditure attributable to common area maintenance could be disallowed as relatable to house property income.

Analysis: The expenditure was found to be incurred for upkeep of common areas of the mall under the leave and licence arrangement, while the leased premises inside the shops were not the assessee's responsibility. The common area maintenance receipts were offered to tax as business income, and the record showed that the expenses were linked to contractual obligations and business operations rather than to earning rental income. The proportional disallowance made by the Assessing Officer was therefore not sustained.

Conclusion: The disallowance of repairs and maintenance was rightly deleted, in favour of the assessee.

Issue (ii): whether legal and professional charges, employees remuneration, advertisement and sales promotion expenses, miscellaneous and general expenses, and security charges could be apportioned to house property income on a proportional basis.

Analysis: The Tribunal found that these expenses were incurred for running and managing the mall as a composite commercial activity, including common area services, tenant-related services, marketing, security, and administrative functions. The assessee had already made suo motu allocations in respect of some heads, and no contrary material was shown to justify a further apportionment merely because part of the receipts was assessed under house property. Following the consistent view taken in the connected matters of the holding company and the parallel factual matrix, the further disallowances were not justified, except for the limited amount sustained by the Commissioner (Appeals) on advertisement and sales promotion and office/general expenses as recorded in the order.

Conclusion: The further disallowances under these heads were not sustainable, and the relief granted by the Commissioner (Appeals) was substantially upheld in favour of the assessee.

Issue (iii): whether the appellate authority could entertain and direct verification of an additional claim of deduction for property tax.

Analysis: The appellate authority was entitled to consider a fresh claim arising from the record even if it had not been accepted in assessment, and could direct verification of the claim in accordance with law. The direction to verify the additional deduction claim was supported by settled principles governing appellate powers.

Conclusion: The direction to verify the additional claim for property tax was upheld, in favour of the assessee.

Final Conclusion: The Revenue's appeals failed on all substantial grounds, with the assessee obtaining relief on the core disallowance issues and the appellate direction for verification of the additional claim being sustained.

Ratio Decidendi: Expenses incurred for common area maintenance and mall operations, when recovered as part of business-linked CAM receipts and not shown to be incurred for earning house property income, cannot be apportioned to house property merely because the assessee has receipts under multiple heads; an appellate authority may also entertain and verify a genuine additional claim arising from the record.

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