TaxTMI 
TaxTMI 
2012 (8) TMI 181
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.... 4) Bhagatwadi Bldg., 132 Bhuleshwar Road, Kabutar Khana, Mumbai-400 002. ii) These 4 buildings are having 546 tenements, which are let out to various tenants. The only activity of assessee company is collecting rent from tenants and no other business is carried out by assessee company in assessment years under consideration. iii) The assessee filed return declaring total income of Rs. 3,21,832/-. The said return was processed u/s.143(1). In the return filed, assessee offered income from house property. It is relevant to state that assessee claimed loss from business which relates to providing various services like running lift, providing liftman and watchman and cleaning all buildings against which service charges, electricity charges, staff welfare, general expenses and repairs and maintenance aggregating to Rs. 5,52,151/- was claimed. iv) Since return filed by assessee was processed u/s. 143(1) of the Act, Assessing Officer stated that claiming of expenses aggregating to Rs. 5,52,151/- as mentioned herein above was not allowable deduction from the income under the head "Income from House Property and therefore income chargeable to tax escaped assessment within the pro....
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....ssed u/s. 143(1) of the Act and there was no assessment made by AO. He submitted that as per explanation 2 of Sec. 147 of the Act where a return has been furnished by assessee but no assessment has been made and the AO is of the opinion that claim of assessee is excessive or the income stated is under stated, it will be deemed that income chargeable to tax has escaped assessment and AO after recording the reasons could initiate reassessment proceedings u/s. 147 of the Act r.w.s 148 of the Act. He submitted that at the stage of initiating reassessment proceedings, only requirement is the belief of AO that income chargeable to tax has escaped assessment. He submitted that AO has recorded the reasons and thereafter notice u/s. 148 was issued. Therefore, the reassessment proceeding has been validly initiated. 10. We have carefully considered the submissions of Ld. Representatives of parties. We have also considered the case of R.J. Wood Pvt. Ltd. (supra) cited by Ld. AR. We observe that in the said case, there was a dispute between assessee and tenants and the tenants claimed that rent payable by them to assessee included maintenance charges but assessee wanted the tenants to pay th....
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.... in the records which leads to under assessment or excessive claim of loss. The Hon'ble Apex Court has also held in the case of ACIT Vs Rajesh Jhaveri Stock Broker Pvt. Ltd. 291 ITR 500 that so long as conditions of Sec. 147 of the Act are fulfilled, AO is free to initiate proceedings u/s. 147 of Act and failure to take steps for regular assessment u/s. 143(3) will not render the AO powerless to initiate reassessment proceedings even when summary assessment with intimation u/s. 143(1)(a) of the Act had been issued. It was further held that under substituted section 147 as amended by Finance Act 1999, existence of only the condition that if AO for whatever reason has reason to believe that income has escaped assessment, confers jurisdiction in reopening the assessment. 11. In the case before us, we are of the considered view that action of AO to initiate reassessment proceeding is in accordance with law. Hence, we uphold his action to initiate reassessment proceedings by rejecting ground Nos. 1 & 2 of the appeal taken by assessee. 12. In ground Nos. 3 to 5 of appeal, assessee has disputed order of Ld. CIT(A) in confirming action of AO to tax rental income under the head "Incom....
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.... that the cess was paid as tax levied by the local authority and as such it is allowable as per proviso to Sec. 23(1). It was also contended that the representatives of assessee by mistake gave a wrong clause or section for claiming the said cess and that should not mean disentitle assessee to claim deduction. The assessee also filed copies of bills of Municipal Corporation. However, Ld. CIT(A) vide para-9 of the impugned order rejected the claim of assessee which reads as under: "I have considered the rival submission finding of AO and have also perused the paper book and evidences. Appellant has shown deduction in computation of income from Income from House property to the extent of Rs. 4,67,389/- in page No. 2 of Paper Book submitted during the course of appellate proceedings, whereas in Schedule 8 of P&L A/c filed by appellant on page No. 12 of paper book reveals the property repair cess of Rs. 4,72,834/-, which reflects the discrepancy. The paper book submitted in appeal reveals the computation showing income from House property of Rs. 4,59,459/- and loss of Profit & gains of Rs. 1,37,627/-. Thereafter, loss from House property income carried forward has been reduced to th....
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....order that all the repair cess bills contains name of other parties and not of the assessee. Therefore, considering the full facts as observed by Ld. CIT(A), we hold that assessee is not entitled to get deduction on repair cess allegedly paid by assessee as the said bills were not raised in the name of assessee but are in the name of other parties. Hence, we do not find any infirmity in the order of Ld. CIT(A). Accordingly, ground Nos. 6 to 8 are rejected. 21. Ground Nos. 9 to 11 of appeal, assessee has disputed the order of Ld. CIT(A) in confirming the disallowance of expenses aggregating Rs. 5,52,152/- claimed by assessee for rendering services to the tenants. 22. The assessee claimed Rs. 5,52,152/- under the following heads as expenses and claimed its deduction from rental income: 1. Service charges Rs. 2,40,260/- 2. Electricity charges Rs. 95,846/- 3. Staff Welfare Rs. 60,587/- 4. General expenses Rs. 37,703/- 5. Repairs & Maintenance Rs. 1,17,755/- Total Rs. 5,52,151/- 23. The AO stated that the above expenses are not allowable as deduction u/s. 23, 24 or any other provisions of I.T. Act when the rental income is assessed under the ....
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....ppellant receives rents from the tenants which does not reveal any evidence of additional charges of services so claimed. With a view to make this point clear it seems necessary to point out that an amount of Rs. 5,52,151/- comprises of service charges of Rs. 240260/-, electricity charges of Rs. 95846/-, staff welfare of Rs. 60587/-, general expenses of Rs. 37,703/- and Repairs & maintenance of Rs. 1,17,755/-. This clearly reveals that such expenses are related with the maintenance of building for which rental income is received. The provision of law of Sec. 29(6) of Maharashtra Rent Control Act, 1999 referred to by Ld. AR goes against the appellant's claim as according to this law appellant either himself or through any person acting on his behalf shall not without just and sufficient cause cut-off or withhold any essential supply or services enjoyed by the tenants in respect of the premises let to them. In fact, this law prohibits appellant from disrupting any such service or essential supplies related to the functional part of the building. Therefore, reliance placed by Ld. AR on this law is untenable. Similarly, the decision of the Hon'ble ITAT are not relevant to the facts of ....
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....d by Ld. AR (supra). We observe that assessee has provided facilities of electricity, lift, security etc. which is essential in a multistory building when the premises are let out to various tenants. It is not the service provided by assessee which is an additional service to tenants. The Hon'ble Delhi High Court has held in the case of Commissioner of Income-tax v. Gupta (H.G.) & Sons 149 ITR 253 that when rental income is assessed under the head income from house property, deduction to be allowed are specified in Sec. 24 of the Act and they are exhaustive. Therefore, no further expenses could be claimed as taken save and except the expenses specified in section 23 or 24 of I.T. Act. In respect of case relied upon by Ld. AR of Universal Textile Water Proof Co.(India) Vs ACIT (supra), we agree with Ld. DR that the facts of that case to segregate rental income received by assessee into service charges and rent are not similar to the facts of the case before us. In that case, assessee company had an office premise which was given on rent to its sister concerns. It was found that assessee provided infrastructure facilities like electronic instrument and gadgets, air conditioners, Epbx....
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....3/-, A.Y. 2001-02 Rs. 99,257/- and loss from House property income Rs. 54,957/-. It appears that loss from House property of A.Y. 2001-02 is not the actual loss but it is because of claim of various charges of services claimed as rendered which in fact is not the additional charges having consequential additional rental income, but, as held above is an incidental services related with maintenance of House property for which standard deduction is duly provided under the I.T. Act. Therefore the arguments of the Ld. AR are not convincing one. When income under reference has been assessed and is approved in appeal, after considering the full facts and circumstances of the case, it is held that AO is right not to setting-off of brought forward non allowable loss in this year." 31. In the absence of any further facts before us, we find no reason to interfere with the order of Ld. CIT(A). Hence we uphold his order not to allow set off of brought forward loss against rental income of assessee. Therefore ground Nos. 12 and 13 also rejected. 32. In Ground Nos. 14 & 15 assessee has disputed the order of Ld. CIT(A) in upholding levy of interest u/s. 234A of I.T. Act. 33. We observe th....