TaxTMI 
TaxTMI 
2019 (7) TMI 800
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....from other sources by simply ignoring the documentary evidences furnished during the course of assessment proceedings as well as appellate proceedings and also by not adjudicating ground of appellant of wrongly assessing Rental Income on assumption and presumption. 1.02 Your appellant prays Your Honour to hold so now treat the Amenity Charges as part of Income from House Property and not as Income from Other Sources. 2.00 DISALLOWANCE TO THE TUNE OF Rs. 4,42,425/- MADE UNDER SECTION 14A R.W.R 8D. 2.01 On the facts and circumstances of your appellant's case and in law, the Hon'ble CIT(A) has erred in confirming action of ld. AO in erroneously applying section 14A read with rule 8D and partially confirming the disallowance to the tune of Rs. 4,42,425/- as against Rs. 56,000/- as claimed and disallowed by your appellant in the return of income for the year. By doing so, the Id. CIT(A) has erred in not appreciating that there is no direct nexus among exempt income earned and expenditure incurred by appellant. 2.02 Your appellant prays Your Honour to hold so now and direct the ld. AO to restrict disallowance at Rs. 56,000/- as made by appellant while filing return of inc....
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....ed, the assessee carried the matter in appeal before the CIT(A). As regards the claim of the assessee that the A.O was in error in subjecting part of the rental receipts to tax under the head "Other sources", the CIT(A) did not find favour with the same and upheld the view taken by the A.O. However, the CIT(A) was in agreement with the alternative contention of the assessee that the disallowance @ 30% that was claimed by the assessee under Sec. 24 was liable to be restricted only to the extent of the amenity charges of Rs. 1,29,58,200/-, and not as regards the amount of Rs. 1,49,59,200/- that was adopted by the A.O. Insofar the disallowance under Sec.14A r.w. Rule 8D was concerned, the CIT(A) directed the A.O to restrict the disallowance to the extent of the exempt dividend income. 5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorised Representative (for short "A.R") for the assessee took us through the facts of the case. It was submitted by the ld. A.R, that the assessee had entered into two agreements with the tenants viz. (i) Leave & license agreement: dated 07.08.2012; and (ii) Amenities agreement: dated 07.....
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....with the aforesaid licensee, had agreed to provide certain amenities/facilities pertaining to the aforesaid premises for a compensation/amenity charges of Rs. 9,30,350/- per month. We find that the A.O being of the view that as the rental receipts only to the extent of Rs. 5,63,500/- per month were relatable to letting out of the property by the assessee to the aforesaid licensee, had thus observed that receipts only to the said extent were to be assessed as the income of the assessee under the head "house property". Accordingly, the A.O had subjected the balance amount of receipts of Rs. 1,49,59,200/- [Rs. 21,17,21,200/-(-) Rs. 67,62,000/-] to tax as the income of the assessee from "Other sources". 8. We have perused the orders of the lower authorities and have given a thoughtful consideration to the issue before us. As is discernible from the "Amenities Agreement", dated 07.08.2012 (Page 134 to 148) of the Assesses "Paper Book" (for short "APB"), the assessee had agreed to provide the aforesaid amenities/services in order to facilitate a better and more effective usage of the property by the licensee. A perusal of the nature of amenities which were to be provided by the assessee....
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....for answering the issue as to whether the letting out of a property along with certain amenities was to be brought to tax under the head "House Property", three issues were to be looked into viz. (a) was it the intention in making the lease - and it matters not whether there is one lease or two, that is, separate leases in respect of the furniture and the building - that the two should be enjoyed together ? ; (b) was it the intention to make the letting of the two practically one letting; and (c) would one have been let alone and a lease of it accepted without the other ? It was observed by the Hon"ble Apex Court that if the answers to the first two questions were in the affirmative and the last in the negative, then it has to be held that the lettings would be inseparable. Now, in the case before us, the provision of amenities/services viz. usage of toilets in the building by the servants/drivers/securities staff, provision of electricity connection and water connections for the toilets, provision of exclusive telephone cable etc. and other such services to the licensee, were aimed at facilitating better and more effective usage of the aforesaid property. In our considered view t....
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....oresaid observations restore the matter to the file of the A.O, with a direction to assess the amenity charges received by the assessee in terms of the "Amenities agreement", dated 07.08.2012 under the the head "house property". Also, the A.O in the course of the "set aside" proceedings shall verify the reason for the discrepancy in the amount of the gross rental shown by the assessee at Rs. 2,17,21,200/- under the head "house Property", as against the amount of Rs. 1,79,26,200/- [Rs. 67,62,500/- (+) Rs. 1,11,64,200/-] as is discernible from the respective agreements viz. Leave & license agreement, dated 07.08.2012 and Amenities agreement, dated 07.08.2012. In case the assessee is unable to explain the aforesaid discrepancy, then the aforesaid amount of receipt of Rs. 37,95,000/- [Rs. 2,17,21,200/- (-) Rs. 1,79,26,200/-] shall be assessed by him under the head "Other sources". Needless to say, the A.O shall in the course of the "set aside" proceedings afford a reasonable opportunity of being heard to the assessee. The Ground of Appeal No. 1 is allowed for statistical purposes in terms of our aforesaid observations. 10. We shall now advert to the claim of the ld. A.R that the A.O h....