TaxTMI 
TaxTMI 
2014 (1) TMI 1726
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....he Property Dealers to the extent of ` 16,54,000/- is not allowable as a deduction against the rental income and the assessee is to be taxed on the total rental income received without any such deduction." 3. The factual matrix. The appellant - assessee is engaged in the business of running a Hotel, a Cinema Hall and owns a commercial building No. 275, situated at Captain Gaur Marg, Sriniwas Puri, Okhla, New Delhi. During the year under appeal, the appellant assessee rented out the said commercial site and showed the annual income thereof under the head "income from house property" to the tune of Rs. 51,00,000/- and consequently showed the income to be taxed under the said head to the extent of Rs. 12,45,734/-. However, the assessee claimed deduction of Rs. 16,54,000/- as commission being paid to two different commission agents, namely, Ever Bright Agencies and M/s Jain Estates, also claimed to be income tax assessees and were instrumental in letting the commercial building on rent. The assessee claimed that only because of intervention of these property agents, it got the best rent of its property and according to it, the commission paid to the said agents was normal expenditure ....
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....and the other one between the owner and the tenants and the second transaction could not have come into existence without there being the first transaction and the amount of brokerage paid was having an overriding title over rent. In other words, to determine actual rent amount of brokerage paid should be deducted. Reference was made to the judgment in Richram Dharmsala Trust Estate (1992) 197 ITR 132 (Orissa). 9. On the other hand, learned counsel for the revenue supported the order passed by the Tribunal. 10. For adjudication of the substantial question as noticed hereinabove, it is necessary to refer to Sections 22, 23 and 24 of the Act. In terms of Section 22 of the Act, income from house property is chargeable to tax. The said section stipulates that the annual value of property consisting of any buildings or land appurtenant thereto of which the assessee is the owner shall be chargeable to income tax under the head 'income from house property'. Section 23 prescribes the method of determination of the 'annual value' for the purpose of Section 22. Sub-section (1) of Section 23 indicates that, for the purpose of Section 22, the annual value of any property shal....
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....or which the property might reasonably be expected to let from year to year; or (b) where the property or any part of the property is let and the actual rent received or receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the amount so received or receivable. From the plain reading of the above, we do not find any express provision regarding allowance of any expenditure, brokerage, commission or by any one name, for determining ALV of the property. Rental income from property is assessed under the head 'income from house property'. It will be pertinent to mention here that computation of income from different sources is done and taxed under five heads, i.e. i) income from salary; ii) income business; iii) capital gains; iv) income from house property; and v) income from any other source. There are express provisions in each head for computation of income. Under the business head, actual expenditure is allowed as cash for mercantile basis, as per sections 28 to 43, while under the head salary only standard deduction is allowed. Likewise, under house property, only deduction is allowed. Likewise, under property, only standard deduct....
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....observing that neither Section 23 nor Section 24 provides for deduction of any expenses incurred towards this purpose and once a particular type of expenditure is not specifically provided to be deductible, deduction therefor cannot be allowed. It was noticed as under:- "The annual value of the property, which is the subject of charge, was originally defined in s. 23(1) as "The sum for which the property might reasonably be expected to be let from year to year". The annual value is thus the sum of which a landlord could let the premises having regard to the condition of the property and of the prevailing circumstances as the language suggests. The taxes are charged on the artificial or national income. It is based on the annual value of the property. The authorities under the Act, Therefore, have to make the assessment on the basis of the national annual value. Section 23 lays down how the annual value is to be determined. Section 24 provides that income chargeable under the head "Income from house property" shall, subject to the provision of sub-s. (2), be computed after making the deductions specified therein. The Legislature has used the word "namely" and this shows that the h....