TaxTMI 
TaxTMI 
2017 (11) TMI 110
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....e during the course of assessment proceedings made a claim before the AO to allow maintenance charges of two flats as deduction while computing the Annual Letting Value of the property (ALV). As per the lease and license agreement of the assessee with the licensees, the assessee was to meet the maintenance charges and only lease was to be received from the tenants. However, the AO did not accept the contention of the assessee by observing that the said claim was not made at the time if filing of original return of income and therefore, the claim made during the course of assessment proceedings cannot be accepted and hence did not allow the same while computing the ALV of the property. 4. During the appellate proceedings, the First Appellate Authority upheld the action of the AO by observing and holding as under (para 6.11): "7.11 I have considered the facts of the case and the submissions made on behalf of the appellant. The AO. has taxed the amount by considering it as rent. The AO. has held that any amount received on leave and licence is rent. On the other hand the Ld. AR has contended that the same is not right as the parties have clearly agreed to pay the damages i....
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....or to the decree holder. As on the day when the Supreme Court decreed the assessee's suit, there was only an inchoate right which arose in his favour. It was only when the Trial Court determined the amount of mesne profits that the right to receive the same accrued in favour of the assessee. In other words, the liability became ascertained only with the order of the Trial Court on 22-12-1962, and not earlier Following the mercantile system of accounting, the mesne profits awarded by the said order were rightly taxed in the assessment year 1963-64 and it was wholly irrelevant as to when the amount awarded was in fact realized by the assessee. The appeal was, accordingly, dismissed" From the above it can be seen that one of the foremost conditions for mesne profits is that there should be an order by Court to the effect of mesne profit. However, in the case of the appellant there is no order or Decree by any Court of Law. Thus, in my considered opinion, the case of the appellant does not fHII within the meaning of mesne profit. Mesne profit has not been defined in the Income-tax Act but the same has been defined in section Lt 12) of the Code of Civil Procedure, 1908, whi....
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....tion of annual letting value u/s 23(1)(b). We find the Mumbai Bench of the ITAT in the case of Varma Family Trust (supra) has held that section 23(1)(b) proceeds on the basis of actual rent received or receivable and therefore all the outgoings for earning the said rental income would be admissible deduction. We find the Tribunal in the case of Bombay Oil Industries (supra) has held that maintenance charges and municipal taxes paid by the assessee are to be deducted from gross rent to arrive at the annual value. We find that in the case of Sharmila Tagore (supra), the Tribunal held that maintenance charges paid to housing society have to deducted even while computing annual letting value. Similar view has been taken in various other decisions relied on by the ld. counsel for the assessee. The decisions relied on by he ld. CIT(A), in our opinion, are distinguishable and not applicable to the facts of the present case. 8. We find the Mumbai Bench of the Tribunal in the case of Gopichand P. Godhwani (supra), after considering the decision of the Hon'ble Bombay High Court in the case of J.K. Investors (Bombay) Ltd. (2001) 168 CTR (Bom) 189 has held that for the purpose of determ....
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....s credited in the profit and loss account and offered for taxation under the head "income from business". The assessee claimed before the AO that the said amount comprised of Rs. 7,20,000/- being license fee for the period from 1.4.2006 to 31.5.2006 and balance amount of Rs. 10,40,000/- being damages for delay in handing over the possession by the licensee and accordingly submitted that Rs. 7,20,000/- could be assessed under the head income from house property whereas the amount of Rs. 10,40,000/- was capital receipt and not taxable. However, the AO rejected the contention of the assessed and added the same to the total income of the assessee while determining the ALV in respect of the flat in Steesha Apartment, Mount Mary road, Bandra (W), Mumbai-400050. In the appellate proceedings, the ld.CIT(A) dismissed the appeal of the assessee vide para 7.11 to 7.9 of the appellate order which is already reproduced above. 10. The ld. AR submitted before us that the issue raised in this ground also covered by the following decisions: i) CIT V/s Goodwill Theatres (P.) Ltd. [2016] 72 taxmann.com 190 (Bombay); ii) Narang Overseas (P) Ltd V/s ACIT (2008) 111 ITD 1(Mum) (SB).....
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....ld be preferred. Reference can be made to various judgments of the Apex Court : CIT v. Vegetable Product Ltd. [1973] 88 ITR 192, CIT v. Naga Hills Tea Co. Ltd. [1973] 89 ITR 236, CIT v. Madho Prasad Jatia [1976] 105 ITR 179, CIT v. J.K. Hosiery Factory [1986] 159 ITR 85 1, Smt. Shashi Gupta v. LIC of India [1995] 84 Comp. Cas. 436, therefore, following the same, it has to be held that mesne profit received for deprivation of use and occupation of property would be capital receipt not chargeable to tax. We hold accordingly. Consequently, the decision of the Special Bench of the Tribunal in the case of Sushil Kumar & Co. (supra), holding to the extent that mesne profit is taxable as revenue receipt is overruled" * In the case of Goodwill Theatres (P.) Ltd, the Hon'ble Bombay High Court has held as under: "11. We make it clear that we have not examined the merits of the question raised for our consideration. We are not entertaining the present appeal on the limited ground that the Revenue must adopt an uniform stand in respect of all assessees. This is more so as the issue of law is settled by the decision of the Special Bench of the Tribunal in Narang Overseas (P.) Ltd. (....
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....in assessee's own case in ITA No.5819/Mum/2008 (AY-2004-05) dated 21.11.2011 vide para 8 of the order and thereafter the same has been confirmed by the Hon'ble jurisdictional High Court in Income Tax Appeal (L) No.1245 of 2011 dated 30.11.2011. 18. The ld.DR could not bring any material contrary to this submissions of the ld.AR. 19. We have heard both the parties on this issue. We find that the issue raised by the revenue is covered against the revenue by the decision of the Tribunal in assessee's own case as well as the finding of the Tribunal confirmed by the Hon'ble jurisdictional High Court. For the sake of ready reference, we reproduce the finding of the Tribunal order and judgment of Hon'ble Bombay High Court as under : * The operative part of the decision of the Co-ordinae Bench of the Tribunal in ITA No.5819/Mum/2008 (para 8,9 and 10) are as under: "8. We have heard the parties. We find that the identical issue has been considered by the Tribunal in the assessee's own case for A.Ys. 2003-04, 2005-06 & 2006-07 being ITA Nos.109-110/M/2010 & 1072/M/2007 order dated 30th March, 2011, dismissing the ground taken by the revenue in those years the Trib....