TaxTMI 
TaxTMI 
2015 (6) TMI 560
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.... to Rs. 1,11,92,127 for arrangement of lease, to be reduced from Rent received for Determination of Actual Rent as per Provisions of section 23(1)(b) of the Income tax Act. The Appellant Submits that the Assessing Officer be Directed to Reduce Brokerage from Rent Received for Determination of Actual Rent as per provisions of section 23(1)(b) of the Income tax Act." 2. The brief facts of the case are that the assessee company is in the business of finance and leasing of premises. In the books of account the assessee had shown rental income of Rs. 1,29,13,475/- on letting out of office premises at 93, 9th floor, 2 North Avenue at Maker Maxity, Bandra Kurla Complex to M/s. Dow Jones consulting India Pvt. Ltd. While working out the "House....
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....eduction is allowable u/s. 24. There is no express provision regarding allowance of any expenditure like brokerage, commission, etc., for determination of annual value of the property except the taxes levied by the local authority on payment basis in respect of the said property. Accordingly, he disallowed the claim of brokerage paid by the assessee. In support, the Assessing Officer relied upon the decision of the ITAT Delhi Bench in the case of Tube Rose Estates Pvt. Ltd. Vs. ACIT (2010) [123 ITD 498] and Chandigarh Bench in the case of CIT vs. Piccadily Hotels Pvt. Ltd. [97 ITD 564]. Thus, the Assessing Officer computed the income from house property at Rs. 90,39,432/- after giving standard deduction @30% u/s. 24. 3. Before the CIT(A)....
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....um/2010 for A.Y. 2005- 06 & 2006-07 iii. Varma Family Trust vs. ITO (1984) 7 ITD 392 (Mum) iv. Suman Didwania vs. ACIT in ITA No. 5805/Mum/2010 for A.Y. 2006-07 v. Sharmila Tagore vs. JCIT (2005) 93 TTJ (Mum) 483 vi. Lekh Raj Channa vs. ITO (1990) 37 TTJ (Del) 297 5. On the other hand, the learned DR strongly relied upon the order of the Assessing Officer as well as the CIT(A) and submitted that while computing income from house property only those deductions/expenses are allowed as are specified in sections 23 and 24. Beyond that no expenditure can be allowed. He further submitted that most of the decisions are in respect of maintenance charges paid to society, which stand on a different footing because it is for the mainten....
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.... deductions and the actual rent received in the hands of the assessee. Such a plea of the assessee cannot be accepted, because what is contemplated u/s. 23 is that the annual value of the property which is let out should be the portion of rent received or receivable by the owner from the tenant/licensee. The first and foremost condition is that it should be in the nature of rent as mutually agreed upon between the two parties for the enjoyment of rights in the property let out in lieu of rent. The deduction envisaged in the proviso to section 23(1) is that, taxes levied by any local authority shall be deducted in determining the annual letting value of the property in that previous year in which said taxes have actually been paid. Section 2....
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....le in respect of services provided. This is evident from the following observations of the Tribunal : "2.8 It is thus clear that the annual value of the property, which has been let out is the rent received or receivable in respect of the user of the property and only deduction allowable while computing the annual value under s.23 on account of any expenditure incurred by the assessee is the payment of municipal taxes. Deduction from the annual rent received/receivable can however, be considered in cases where rent also includes the payment in respect of any other services provided by the landlord in addition to renting out of the property and rent is inclusive of consideration for such services. For instance, there may be situations whe....
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...." 7. If such a nature of expenses like brokerage, professional fee, etc., is held to be allowable, then numerous other expenses like salary or commission to an employee/agent who collects the rent can also be held to be allowable. This is not the mandate of the law. So far as the decisions relied upon by the learned counsel before us are mostly pertaining to maintenance charges paid to the society, wherein it has been held to be allowable as deduction u/s. 23 itself. There is distinction between maintenance charges and the brokerage paid because such a charge is given/paid for the very maintenance of the property so as to enjoy the property itself; whereas brokerage has nothing to do with the property or the rent which is given to a thir....