TaxTMI 
TaxTMI 
2020 (5) TMI 257
X X X X Extracts X X X X
X X X X Extracts X X X X
....rounds of appeal: - GROUND No. I: TREATING MUNICIPAL TAXES PAID AMOUNTING TO Rs. 7,99,519/- AS PART OF RENT LIABLE TO BE TAXED U/S 23 OF THE ACT: On the facts and in circumstances of the case and in law, the CIT(A) erred in making an addition of Rs. 7,99,519/- to the annual letting value ('ALV') by treating the same as part of effective rent received by the appellant. GROUND No. II: On the facts and in circumstances of the case and in law, the CIT(A) erred in not admitting and considering the additional evidence filed by the appellant. GROUND No. III: DISALLOWANCE OF ALL EXPENDITURE DEBITED TO P/L ACCOUNT AMOUNTING TO Rs. 44,52,054/- 1. On the facts and circumstances of the case and in law, the C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee earning rental income was assessed for year under consideration u/s 143(3) on 30/01/2014 wherein the income of the assessee was determined at Rs. 53.20 Lacs after certain adjustments / additions as against returned income of Rs. 11.07 Lacs e-filed by the assessee on 20/09/2012. 2.2 It transpired that the main object of assessee company was to run hotels, restaurants and guest houses etc. The assessee earned rental income of Rs. 76 Lacs which was offered under the head Income from House Property. After deducting municipal taxes for Rs. 7.99 Lacs and after claiming statutory deduction of 30%, the rental income thus offered to tax amounted to Rs. 47.60 Lacs. Although the assessee claimed business expenditure of Rs. 44.52 Lacs but did n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome. 2.4 Upon perusal of leave and license agreement, it transpired that the municipal taxes & other outgoings were to be borne by the licensee. Therefore, the assessee could not undertake to pay the liability of a third party. Therefore, the deduction of the same, while computing Income from House Property, was denied and the income of the assessee was determined at Rs. 53.20 Lacs. 3.1 Before Ld. CIT(A), the assessee filed additional evidences which were in the shape of license issued by Health Department of Municipal Corporation of Greater Mumbai in support of the fact that the business was already set-up. Against the same, a remand report was called from Ld. AO which was duly considered. 3.2 Upon due consideration, Ld. CIT(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urces. Aggrieved, the assessee is under further appeal before us. 4.1 First, we take up the issue of deduction of BMC Taxes. The perusal of leave and license agreement dated 02/12/2011 as placed on record would reveal that the assessee has leased out certain area on the ground floor (referred to as Licensed premises) of the building previously known as Sail Sagar (now known as Dream House) "A" Wing standing on Plot No. 5, Dadar Matunga Division, near Dadar Railway Station to one Shri Mahendra Shivji Udeshi for a sum of Rs. 9.50 Lacs per month for the first 12 months starting from 01/08/2011. Accordingly, the assessee has earned rental income for 8 months amounting to Rs. 76 Lacs during the year under consideration. As per clause-4, the l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4.3 Upon due consideration of factual matrix as enumerated hereinabove, the crystal-clear position that emerges is the fact that as per the terms of lease and license agreement, the licensee alone was liable to pay all taxes / outgoings with respect of leased premises. However, the same could be paid by the assessee and the same were reimbursable by licensee. This position has also been reiterated by the assessee in its submissions. However, the liability to pay the taxes was with respect of licensed premises only which was approx. 19% (232 Sq.Meters out of 1246.66 Sq. Meters) of total area of the building. Therefore, 19% of BMC taxes amounting to Rs. 7,99,519/- could be attributed to licensed premises. The proportionate amount comes ....