AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1132
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....rm has been engaged in the business of finance, investment and real estate development. The assessee had been pursuing the development of Bahar Property during the financial year 2006-07 relevant to assessment year 2007-08. A part of the Bahar Property was leased out during the year. Brokerage of Rs.61,73,200/- was paid to the broker for arranging for the lessee of the property. It was contended before the AO that the brokerage was paid for the services of the broker in assisting the letting out of the property on lease. The AO, however, observed that the assessee itself had claimed the monthly lease rental income under the head "income from house property" and had also claimed statutory deductions of sum equal to 30% of the annual letting value under section 24 of the Income Tax Act. Since the expenditure of brokerage paid was not related to the business of the assessee hence the same was disallowed. In first appeal, the ld. CIT(A) after considering the submissions of the assessee held that such type of expenditure relating to brokerage paid for facilitation/arranging for the lessee for letting out of the property was not allowable as business expenditure, hence confirmed the orde....
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....velopment business of the assessee, but has failed to convince us as to how the said brokerage paid was related to business of the assessee. The brokerage was paid neither for the development of the property nor for the sale of the property. It was paid only for letting out of the property, income from which has been assessed by the assessee in its return of income as income from house property. The assessee has also claimed statutory deduction of 30% on the annual rental income. The act of payment of brokerage for the purpose of letting of the property neither can be said to be related to the business of the assessee nor can be said to be incidental to the business of the assessee, especially when the rental income has been claimed under the head 'income from house property' and the statutory deduction upon which has also been claimed. The ld. A.R. has relied upon an authority of the co-ordinate bench of the Tribunal in the case of 'Sharmila Tagore' - [(2006) 150 Taxman 4 (Mum)] and also another authority in the case of 'Suman Didwania' (ITA No.5805/M/10) decided on 15.02.12 wherein the payment of maintenance charges/non occupancy charges paid to housing society have been held to ....
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....." 6. It may be observed that though the different benches of the Tribunal have held that the payment of maintenance charges etc. paid to the housing society is an allowable deduction on the principle that the same is in the shape of taxes and charges etc. which have a considerable bearing on the actual letting value of the property. However, the payment of brokerage for arranging for a lessee cannot be said to have any bearing effect on the annual letting value of the property. The ld. D.R. has further brought into our notice an authority of the co-ordinate bench of the Tribunal in the case of 'Excellent Associates' - [(2005) 96 ITD 57 (MUM.)/[2005] 96 TTJ (MUM.) 1124] and further in the case of 'Scaffold Properties Pvt. Ltd.' (ITA No.403/Mum/2008) decided on 25.04.12, wherein the co-ordinate benches of the Tribunal have specifically held that the brokerage and commission paid to lease out the property is not an allowable deduction while determining the annual letting value of the property. In view of the law laid down by the Hon'ble Delhi High Court as well as the specific findings on the issue under consideration of the co-ordinate benches of the Tribunal, we do not find any me....
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....d No.IV Ground No.IV is reproduced as under: "1. The CIT(A) erred in not allowing the professional fees of Rs.10,25,000/- as a reduction, while computing annual letting value of the leased premises on the alleged ground that there was no specific provision u/s 24 of the Act for allowing such expenses as a deduction. 2. The Appellant prays that the above expenditure of Rs.10,25,000/- be considered as a reduction while computing annual letting value." 9. This ground has been taken as an alternative to ground No.III by the assessee. We have already held that neither the payment of professional fees of Rs.10,25,000/- was relating to business of the assessee nor the same can be said to be allowable deduction for determining the annual letting value of the property. The said expenditure cannot be said to be having any bearing on the annual letting value of the property and in view of the judgment of the Hon'ble Delhi High Court in the case of 'H.G. Gupta & Sons' (supra) and the co- ordinate bench of the Tribunal in the cases of 'Excellent Associates' (supra) and 'Scaffold Properties Pvt. Ltd.' (supra), this issue is also decided against the assessee and in favour of the Revenue. Gro....
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....towards designed work of single screen cinema can be said to be towards improvement/development of the said property. Hence, in our view, the same is an allowable deduction and is held accordingly. iii) Rajan D. Hate: Rs.39,284/- : The said expenditure has been claimed to be incurred for different consultancy charges such as supervision charges for set back area, handling over, supervision and liason for storm water drainage compilation, supervision and liason for tree authority, NOC, photography of trees, supervising completion certificate for occupation certificate. 13. In view of our findings above, expenditure paid towards consultancy for supervision, improvement and development of the property was related to business of the assessee, hence this expenditure is also held to be an allowable deduction and is directed accordingly. iv) Valuation of property: Rs.16,836/- The said expenditure has been claimed to be incurred for getting the valuation of the property done for the purpose of its letting out. The said expenditure as observed can not be said to be in relation to the business of the assessee as the letting out of the property has never been the business of the assessee....